Pakistan, IMF reach staff-level agreement on $7bn bailout deal

Major relief for Pakistan as the government has reached the three-year $7 billion bailout programme with the International Monetary (IMF).

According to the IMF, the new package should enable Pakistan to “cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth”.

“The Pakistani authorities and the IMF team have reached a staff-level agreement on a comprehensive program endorsed by the federal and provincial governments, that could be supported by a 37-month Extended Fund Arrangement (EFF) in the amount equivalent to SDR 5,320 million (or about $7 billion at current exchange rates),” read the statement.

The agreement was reached after government did reforms it committed with the IMF. This also includes effort to broaden the country’s tax base.

In this regard, the authorities plan to increase tax revenues through measures of 1.5% of GDP in FY25 and 3% of GDP over the program.

The authorities now aim to raise nearly $46 billion in taxes, a 40% increase from the previous year during the 2024-25 fiscal year.

As part of the push, Pakistan’s tax authority earlier this month blocked 210,000 SIM cards of users who have not filed tax returns in a bid to widen the revenue bracket.

This is the 24^th bailout package for Pakistan in more than six decades. The country initiated discussions with the international loan lander for the new multi-billion dollar loan agreement to support its economic reform program.