Pakistan to receive $6bn IMF bailoutEuropost
Pakistan and the International Monetary Fund (IMF) have agreed on terms for a $6bn bailout package, to be disbursed over a span of 39 months. The IMF said last week that the programme of structural reforms will target increasing government revenues and reducing spending, bringing down the primary fiscal deficit - which excludes development spending - to 0.6 percent of the Gross Domestic Product (GDP) in Pakistan's upcoming budget.
It will include "tax policy revenue mobilisation measures to eliminate exemptions, curtail special treatments, and improve tax administration," as well as target Pakistan's loss-making state-owned enterprises and the country's energy sector, long plagued by structural issues that have led to a burden of heavy subsidies on the government.
The agreement will now be reviewed by the IMF's management and board, and approval will be "subject to the timely implementation of prior actions and confirmation of international partners' financial commitments", the IMF said.
This is not the first time Pakistan is turning to the IMF for funds. In 2013, Prime Minister Nawaz Sharif agreed to an IMF loan of $6.6bn, in exchange for pledges to build a more equitable tax base and private state-owned enterprises. The country has also received loans from the United Arab Emirates and Saudi Arabia ranging from $6bn to $6.2bn. In addition, it borrowed $40bn from China in 2015, but the decision came at a time when Pakistan's economy was struggling with high inflation, a declining rupee and falling foreign exchange reserves.