Pakistan has finalized a new loan agreement worth $7 billion with the International Monetary Fund, announced by IMF on Friday. Earlier this year, the IMF authorized the immediate disbursement of the final $1.1 billion installment from a $3 billion bailout package for Pakistan.
Finance Minister Muhammad Aurangzeb disclosed plans for securing a long-term loan to stabilize the economy post the conclusion of the existing bailout. The newly agreed loan spans 37 months and aims to bolster fiscal and monetary policies. It includes reforms to broaden the tax base, enhance management of state-owned enterprises, promote competition, ensure fair investment opportunities, improve human capital, and expand social protection through increased coverage and benefits in a major welfare initiative.
Pakistan has already announced to reforms many of them, just like imposing tax on agricultural income, salaried persons and also to abolish several ministries. Finance minister Muhammad Aurangzeb has repeatedly said that we need to increase our tax collection. He announced an ambitious tax revenue target of 13 trillion rupees ($47 billion) for the fiscal year that began on July 1, a near 40% jump from the prior year.
The agreement is pending approval by the IMF’s executive board.