IMF approves $6.7bn Pakistan loan to ease economic crisis
- 4 September 2013
- From the section Business
The International Monetary Fund (IMF) has approved a $6.7bn (£4.3bn) loan for Pakistan amid a continuing economic crisis in the country.
The loan will be paid out over three years, beginning with the release of $540m, but comes with strings attached.
The government must enact reforms to increase growth, bring down the budget deficit and improve the rate of tax collection.
Pakistan already owes the IMF nearly $5bn after earlier loans.
It last received an IMF bailout six years ago, but the government then in power failed to push through the necessary reforms.
The economy has grown by an average of just 3% a year since then - too slow to support its rapidly growing population.
Meanwhile the budget deficit has stayed high, foreign cash reserves have dwindled and taxes bring in just 10% of GDP - one of the lowest proportions in the world.
Under the new plans, the deficit must fall from around 9% of GDP last year to 3.5-4% in three years, while tax collection must be improved.
There are also hopes that reforms to the energy sector will help prevent frequent power cuts.