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Pakistan Faces Intensified IMF Conditions as Growth Falls Short and $4.9 Billion Loan Sought

Pakistan's economy grew 2.68% in FY2024-25, missing its target, as the IMF tightens reform benchmarks and Islamabad seeks external financing to stabilize reserves.

A labourer stacks sacks of sugar outside a shop at a wholesale market in Karachi, Pakistan June 9, 2023. REUTERS/Akhtar Soomro/File Photo
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Meanwhile, Pakistan is preparing to raise USD 4.9 billion in external commercial financing for the next fiscal year which is 2025- 26.
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Overview

  • Pakistan's GDP growth for FY2024-25 was 2.68%, below the government’s 3.6% target, with agriculture growing modestly and the industrial sector contracting.
  • The IMF released a second $1 billion tranche under its Extended Fund Facility but introduced 11 new structural reform conditions for further disbursements.
  • Reforms demanded by the IMF include parliamentary budget approval, agricultural income tax enforcement, and phased withdrawal of industrial incentives.
  • Pakistan plans to raise $4.9 billion in external commercial financing for FY2025-26, with loans sought from banks in China, the UAE, and other international lenders.
  • Tensions with India, reignited by the April 22 Pahalgam attack, have heightened scrutiny of Pakistan's economic management and its ability to meet IMF reform goals.