The IMF staff agreement (SLA) with the Pakistani authorities on the first Examination of the Extended Fund of 37 months (EFF), while introducing a new 28 -month arrangement as part of the resilience and sustainability installation (RSF), totaling around 1.3 billion dollars is a significant development for the growth of macroeconomic stability of macroeconomic stability Pakistan.
This agreement, pending the approval of the IMF board of directors, will grant Pakistan access to around 1 billion dollars under the EFF, bringing total disbursements to around $ 2 billion. The RSF aims to support the country’s efforts to strengthen resilience to natural disasters, to improve the budget and investment planning for climate adaptation, improvement of water resources management, strengthening climate information systems and alignment of energy sector reforms with mitigation objectives.
Over the past 18 months, Pakistan has made significant progress in restoring macroeconomic stability and the reconstruction of confidence despite a difficult global environment – a departure from a scenario close to the defect only 18 months ago. Economic growth remains moderate, but inflation has decreased at its lowest level since 2015.
The continuation of the program should unlock more external sources of financing, which can be exploited for growth. The economy now needs growth that must be focused on exports, rather than by consumption. The RSF arrangement underlines the recognition by the IMF of the critical need for climate resilience in Pakistan.
By focusing on improving the country’s ability to resist natural disasters and promoting sustainable development, the RSF aims to meet immediate and long -term challenges posed by climate change. This development follows the IMF approval of a 7 billion dollars loan for Pakistan in September 2024, which was intended to support the country’s economy in difficulty.
The new SLA and RSF arrangement is based on this foundation, reflecting continuous collaboration between Pakistan and the IMF to ensure economic stability and resilience. The economy continues to attach it along the low growth route, with a large part to be unlocked thanks to more investments, in particular in areas oriented towards export, while allowing a transition far from consumption.
Avoiding the IMF program in the future can only be done by such an approach, and not yet another strong growth based on borrowed capital, to emerge in a few quarters.
Originally published in The news