Pakistan has applied to the IMF for a loan of $8 billion under the Extended Fund Facility to utilize all its remaining capacities. This amount is about $2 billion more than the initial offer made by the IMF.
Pakistan has demanded this huge amount, but with some strict conditions. Adoption of additional revenue measures equal to 1.6% of the country’s GDP is one of the basic requirements. Several steps are necessary to satisfy the IMF and obtain the loan.
So far, the IMF is willing to give Pakistan $6 billion, but only if Pakistan meets the requirements. IMF management will assess Pakistan’s commitment to these measures before making a final loan decision.
To meet its immediate budgetary needs, the Government of Pakistan is requesting this huge financial assistance. Unlike in the past, Pakistan does not intend to seek additional bilateral loans from its usual creditors Saudi Arabia and China. This change reflects Pakistan’s need from the IMF to maintain economic stability and meet debt obligations.
If approved, the $8 billion loan would be critical in helping Pakistan overcome its financial woes and make needed economic reforms. The government’s efforts to meet the requirements set by the IMF show its commitment to securing funds and maintaining economic stability.
As things progress, everyone is waiting to see what the IMF decides, which will have a major impact on Pakistan’s economy. The response to this request will define the country’s fiscal outlook and its ability to overcome fiscal challenges.
