Pakistan Seeks $4.9 Billion Loan Amid Deepening Debt Crisis, Despite IMF Support

Pakistan’s Economic Struggles Persist, Seeks $4.9 Billion Foreign Loan Despite IMF Relief
Pakistan’s economic outlook for the fiscal year 2024-25 continues to raise concerns, as the country’s growth figures fell notably below government projections. The gross domestic product (GDP) expanded by only 2.68%, falling short of the 3.6% target set by authorities. This was highlighted in a recent report shared at the National Accounts Committee meeting.

Despite support from the International Monetary Fund (IMF), Pakistan's economy remains on shaky ground. To bridge its financial gaps, the government is planning to secure a foreign loan worth $4.9 billion for the upcoming financial year 2025-26, reflecting ongoing efforts to stabilize the economy.

Uneven Sectoral Growth Highlights Structural Challenges

Pakistan's economic output hits $411 billion, per capita income at $1,824, reveals report However, performance across key sectors varied significantly. The agriculture sector grew modestly by 1.8%, while the industrial sector shrank by 1.14%, pointing to underlying weaknesses. In contrast, the services sector showed impressive momentum, expanding by 39% between July and March. Although this growth offered some relief, it wasn't enough to push the overall economy towards its intended trajectory.

$4.9 Billion Foreign Loan Plan: Pakistan's Economic Strategy

Official sources indicate that Pakistan aims to raise $4.9 billion through external commercial borrowing in the next fiscal year Of this, $2.64 billion will be acquired as short-term financing, expected at an interest rate of 7-8%, with no binding performance clauses. Long-term loans worth $2.27 billion are planned, with talks underway with major international banks. 

IMF Reserve Requirements and Current Position

To strengthen Pakistan’s financial standing, the IMF has advised the country to maintain foreign exchange reserves of $13.9 billion by the end of June.In an effort to rejuvenate economic activity, the central bank reduced the key policy rate by 100 basis points, bringing it down to 11% this month. This move resumes the easing cycle that had paused in March and aims to make borrowing cheaper for businesses.