The IMF Personnel-Level Agreement (SLA) with the Pakistani authorities on the first review of the 37-month extended fund facility (EFF), while introducing a new 28-month scheme under the resistance and sustainability facility (RSF), a total of approx. $ 1.3 billion is a significant development to transition to growth from macroeconomic stability in Pakistan.
This agreement, pending the approval of the IMF’s Executive Board, gives Pakistan Pakistan access to about $ 1 billion under EFF, which brings the total payouts to approx. 2 billion dollars. The RSF aims to support the country’s efforts to build resilience to natural disasters, improve the budget and investment planning for climate adaptation, improve water resource management, strengthen climate management systems and adapt energy sector reform with mitigation goals.
Over the past 18 months, Pakistan has made significant progress in restoring macroeconomic stability and rebuilding confidence despite a challenging global environment-a far departure from a close to-default scenario only 18 months back. Economic growth remains moderate, but inflation has fallen to its lowest level since 2015.
The continuation of the program must unlock more external sources of financing that can be utilized for growth. The economy now needs growth to be exported, rather than through consumption. The RSF event emphasizes the IMF’s recognition of the critical need for climate prize in Pakistan.
By focusing on improving the country’s capacity to withstand natural disasters and promoting sustainable development, the RSF aims to tackle both immediate and long -term challenges that climate change pose. This development follows the IMF’s approval of a $ 7 billion loan to Pakistan in September 2024, which was intended to support the country’s fighting economy.
The new SLA and RSF event is based on this foundation that reflects ongoing cooperation between Pakistan and IMF to ensure economic stability and resilience. The economy continues to tie along the low growth path, with growth largely to be unlocked through several investments, especially in export -oriented areas, while enabling a transition away from consumption.
Avoiding the IMF program in the future can only be performed through such an approach, and not yet another high-growth spurt based on borrowed capital, only to fizz out in a few quarters.
Originally published in the news
