Pakistan has received approval from the International Monetary Fund for a $1 billion loan disbursement, which would help boost the country's finances amid an escalating conflict with its neighbour India.
The decision also unlocks an additional $1.4 billion funding under the IMF's sustainability programme that will aid Pakistan's economic resilience against climate vulnerabilities and natural disasters, although it has yet to be disbursed, the Washington-based fund said in a statement on Friday.
The IMF stated that authorities in Islamabad have demonstrated "strong" implementation of conditions under a $7 billion bailout package approved in 2024, which have resulted in an improvement in fiscal conditions and a continuing economic recovery.
The country's real gross domestic product grew 2.5 per cent in 2024 and is projected to inch up to 2.6 per cent this year and further increase to 3.6 per cent in 2026, according to IMF estimates.
“Pakistan has made important progress in restoring macroeconomic stability despite a challenging environment … the economy continues to recover, with inflation sharply lower and external buffers notably stronger," Nigel Clarke, the IMF's deputy managing director, said in the statement.
The decision did not make any mention of Pakistan's continuing and growing conflict with India. The nuclear-armed neighbours fired missiles at each other on Saturday, escalating tensions that stemmed from an April 22 terror attack in the tourist spot Pahalgam that killed 26 people.
"Moving forward, policy priorities will include advancing reforms to strengthen competition, raise productivity and competitiveness, reform SOEs [state-owned enterprises], improve public service provision and energy sector viability and build climate resilience," the IMF said.
Debt burdens, inflation, rising energy costs, youth unemployment and climate vulnerability have taken a toll on Pakistan’s economy over the past decade. Yet in the past year, there have been some indications of improvement.
Inflation, in particular, has seen a steady decline: after soaring to nearly 40 per cent in May 2023, it has gradually slowed down and hit 0.28 per cent last month, the lowest since the index began in 2017, Pakistan's Bureau of Statistics announced last week.
Pakistan's Finance Minister Muhammad Aurangzeb last month in Washington said the country is on the right track, especially after Fitch upgraded its credit rating to "B-" – still non-investment grade but out of "substantial risk" territory, according to the New York-based agency's scale.
However, he did acknowledge that efforts on privatisation had fallen short. Generating revenue through enforced taxation and privatisation is a major component of Pakistan’s bailout deal with the IMF.
Risks to Pakistan's outlook, however, remain elevated, particularly from global economic policy uncertainty, rising geopolitical tensions and persistent domestic vulnerabilities, the IMF said.
"Against this backdrop, the authorities need to maintain sound macroeconomic policies and accelerate reforms to safeguard the macroeconomic gains and underpin stronger and sustainable, private sector-led medium-term growth," it added.
The IMF also noted that the State Bank of Pakistan's tight monetary policy stance has been "pivotal" in reducing inflation to historic lows, and that a more flexible exchange rate would be able to facilitate the adjustment to external and domestic shocks, aiding the rebuilding of reserves.
"Prompt action to address undercapitalised financial institutions and vigilance over the financial sector are necessary for financial stability. Strengthening of AML/CFT [anti-money laundering/combating the financing of terrorism] frameworks is also needed," the fund added.
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
Landfill in numbers
• Landfill gas is composed of 50 per cent methane
• Methane is 28 times more harmful than Co2 in terms of global warming
• 11 million total tonnes of waste are being generated annually in Abu Dhabi
• 18,000 tonnes per year of hazardous and medical waste is produced in Abu Dhabi emirate per year
• 20,000 litres of cooking oil produced in Abu Dhabi’s cafeterias and restaurants every day is thrown away
• 50 per cent of Abu Dhabi’s waste is from construction and demolition
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The five pillars of Islam
1. Fasting
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3. Hajj
4. Shahada
5. Zakat
Dust and sand storms compared
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RESULT
Bayer Leverkusen 2 Bayern Munich 4
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Arabian Gulf League fixtures:
Friday:
- Emirates v Hatta, 5.15pm
- Al Wahda v Al Dhafra, 5.25pm
- Al Ain v Shabab Al Ahli Dubai, 8.15pm
Saturday:
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- Sharjah v Al Wasl, 5.20pm
- Al Jazira v Al Nasr, 8.15pm
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Know your camel milk:
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Goes well with: chocolate and caramel, saffron, cardamom and cloves. Also works well with honey and dates.
Moonfall
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The specs
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COMPANY PROFILE
Name: Qyubic
Started: October 2023
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The biog
Title: General Practitioner with a speciality in cardiology
Previous jobs: Worked in well-known hospitals Jaslok and Breach Candy in Mumbai, India
Education: Medical degree from the Government Medical College in Nagpur
How it all began: opened his first clinic in Ajman in 1993
Family: a 90-year-old mother, wife and two daughters
Remembers a time when medicines from India were purchased per kilo
Blackpink World Tour [Born Pink] In Cinemas
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Rating: 3/5
