Pakistan's $7 billion IMF bailout review due

Pakistan's finance minister Muhammad Aurangzeb said an International Monetary Fund (IMF) delegation will visit the country next week.

The first assessment of the 7-billion-dollar rescue package is scheduled for march. Last summer, as part of its economic recovery strategy, Islamabad received a 7-billion-dollar loan from the IMF.

According to Pakistan’s finance minister, the country's economy has stabilised and should now prioritise export-led growth. A separate delegation from the IMF is also visiting Pakistan to discuss climate funding of about 1 billion dollars.

The funding will be provided through the resilience and sustainability trust. That trust is an initiative of the IMF established in 2022 to offer concessional loans for climate-related projects. This includes adaptation and the switch to renewable energy.

Pakistan's economy is recovering, with growth in 2024 and improved investor confidence. The foreign exchange reserves have improved and can cover imports for more than two months. FDI, or foreign direct investment, increased by 20 percent so far this year.

However, the country still faces challenges like inflation and poverty. The poverty rate is projected to stay around 40 per cent until 2026. With domestic energy prices on the rise, inflation is likely to stay high. Political uncertainty and strict macroeconomic policy would cause economic growth to stay below potential.