IMF Approves $12 Billion Bailout Package for Pakistan

Economic Hardship Worsens Due to COVID-19... Surge in Debt and Foreign Currency Shortage
Pakiseutan Government Proposes Reforms Including Strengthening Central Bank Independence

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] The International Monetary Fund (IMF) has approved a plan to provide $1 billion (1.2 trillion won) in bailout funds to Pakistan, which is facing a severe economic crisis.

According to Pakistani media and foreign news outlets on the 3rd, the IMF announced that it approved the $1 billion bailout plan after reviewing the Pakistani government's economic structural reform plan the previous day.

Pakistan has been experiencing an economic crisis characterized by a surge in debt and a shortage of foreign currency due to projects such as the China-led Belt and Road Initiative (connecting China, Central Asia, and Europe via land and maritime Silk Roads).

In July 2019, Pakistan agreed to receive a $6 billion bailout from the IMF, but due to non-compliance with conditions, only $2 billion has been disbursed so far, with the remainder delayed. The COVID-19 pandemic has further exacerbated Pakistan's economic difficulties.

The IMF decided to provide the $1 billion bailout this time as the Pakistani government proposed reforms including increasing revenue, reducing expenditures, and strengthening the independence of the central bank.

Pakistan's economic growth rate is expected to be 4% this year, but the IMF assessed that it remains vulnerable due to the possibility of a COVID-19 resurgence, tight international financial conditions, escalating geopolitical tensions, and delays in implementing structural reforms.

Antoinette Sayeh, IMF Deputy Managing Director, stated, "The recent policy efforts by the Pakistani government to strengthen economic resilience are welcome," adding, "Timely and consistent policy implementation and reforms are essential to establish a stronger and more sustainable growth foundation."

This content was produced with the assistance of AI translation services.