The IMF has approved a more than $1.1bn disbursement to Pakistan, reviving a stalled $7bn assistance package expected to help stave off default despite a severe economic crunch and devastating floods.
The fund’s board in Washington approved the disbursement after Prime Minister Shehbaz Sharif’s government introduced austerity measures, including sharply increasing domestic fuel prices.
Antoinette Sayeh, deputy managing director and acting chair of the IMF executive board, said maintaining the reform measures would be crucial to steadying the economy.
“Pakistan’s economy has been buffeted by adverse external conditions, due to spillovers from the war in Ukraine, and domestic challenges, including from accommodative policies that resulted in uneven and unbalanced growth,” she said.
“Steadfast implementation of corrective policies and reforms remain essential to regain macroeconomic stability, address imbalances and lay the foundation for inclusive and sustainable growth.”
The unpopular austerity measures have proved politically perilous at a tumultuous time for the country of 220mn. Inflation has soared, with a basket of “sensitive” food and fuel prices last week rising 45 per cent from a year earlier. Flooding has killed more than 1,000 people, affected more than 30mn others and destroyed rice and cotton crops.
The formal resumption of an IMF programme “is a major step forward in our efforts to put Pakistan’s economy back on track”, Sharif said on Twitter.
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