Pakistan: PM Sharif praises IMF's $7 billion loan as lifeline

Prime Minister Shehbaz Sharif has announced on Wednesday that the International Monetary Fund (IMF) had approved a critical $7 billion loan. The approval, seen as a lifeline for the cash-strapped nation, comes amid Pakistan’s struggle to meet its external financing needs.

Sharif, in a statement, expressed “satisfaction” and thanked IMF Chief Kristalina Georgieva for facilitating the deal, crediting his economic team for the hard-fought negotiations.

Speaking from New York during the U.N. General Assembly session, Sharif acknowledged the strict terms that Pakistan had to meet to secure the 37-month loan agreement under the IMF’s Extended Fund Facility. “The lender had set stringent conditions,” Sharif stated, adding that longstanding allies like China, Saudi Arabia, and the UAE played a pivotal role in finalizing the deal.

Pakistan, burdened by debt and teetering on the brink of economic collapse, has now entered its 25th IMF program since gaining independence in 1947—the highest number for any country. Despite this track record, Sharif made a bold commitment: “We are committed to ensuring this is the last time we seek such financial support from the IMF.”

However, critics remain skeptical. Pakistan’s chronic economic mismanagement, exacerbated by corruption and political instability, has made successive governments dependent on external support. Experts argue that without fundamental reforms, the cycle of bailouts will persist. As one economist put it, “the IMF’s assistance might ease immediate financial pressures, but the underlying issues remain unaddressed.”

Inflation in Pakistan recently hit historic highs, pushing the country to the brink of default on its external payments before an IMF bailout last summer helped avert disaster. While inflation has since eased, the road ahead remains challenging. Moody’s upgraded Pakistan’s credit ratings in light of improved macroeconomic conditions, but the outlook hinges on sustained reform.

The IMF program, according to the Asian Development Bank (ADB), is expected to stabilize Pakistan’s economy, consolidate public finances, and expand social protections. But the ADB warned that the country still faces significant challenges, especially with ongoing political and institutional tensions. The government’s tax reforms—an IMF requirement—have sparked protests from traders and opposition parties, further complicating efforts to rebuild the economy.

Pakistan’s economic woes are compounded by political turmoil. The removal of former Prime Minister Imran Khan in a no-confidence vote in April 2022 triggered widespread unrest. Khan, currently imprisoned on what his supporters call politically motivated charges, remains Pakistan’s most popular politician. His Pakistan Tehreek-e-Insaf (PTI) party has organized protests, accusing the government of rigging recent elections to suppress Khan-backed candidates—claims that the Sharif administration denies.

As Pakistan navigates its deepest economic crisis, the IMF loan provides a temporary reprieve, but the long-term viability of Sharif’s promise—that this will be the last time Pakistan turns to the IMF—remains in question.