## IMF Survey: Pakistan Gets $7.6 Billion Loan from IMF

_IMF News, November 24, 2008_

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**Canonical URL:** [IMF Survey: Pakistan Gets $7.6 Billion Loan from IMF](https://www.imf.org/en/news/articles/2015/09/28/04/53/socar112408c)

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## Bibliographic details
- Published: November 24, 2008

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### Executive summary
- The IMF's Executive Board approved a $7.6 billion loan for Pakistan to support a stabilization and rebuilding program while expanding the social safety net to protect the poor.
- Of the $7.6 billion loan, $3.1 billion will be made available by the IMF immediately to strengthen Pakistan's reserves.
- The loan is a 23-month Stand-By arrangement intended to underpin fiscal and monetary tightening to reduce inflation and the external current account deficit.

### Program objectives and measures
- Primary objectives:
  - Restore overall economic stability and confidence through tightening of macroeconomic policies.
  - Ensure social stability and adequate support for the poor during the adjustment process.
- Key measures envisaged for the coming 24 months:
  - Fiscal consolidation:
    - Fiscal deficit, excluding grants, will be brought down from 7.4 percent of GDP in 2007/08 (starting July 1) to 4.2 percent in 2008/09 and 3.3 percent in 2009/10.
    - Adjustment will be achieved primarily by phasing out energy subsidies and strengthening revenue mobilization through tax policy and administration measures.
    - Reduction in expenditures will create room to increase spending on the social safety net.
  - Monetary policy and reserves:
    - The State Bank of Pakistan (SBP) will act to build international reserves, bring down inflation to 6 percent in 2010, and eliminate central bank financing of the government.
    - The program includes measures to improve monetary management, enhance SBP's bank resolution capacity, and avoid use of public resources to support the stock market.
  - Social protection:
    - Increase expenditure on the social safety net via cash transfers and targeted electricity subsidies.
    - The fiscal program for 2008/09 envisages an increase in spending on the social safety net of 0.6 percentage points of GDP to 0.9 percent of GDP.
    - Pakistan will work with the World Bank to prepare a more comprehensive and better targeted social safety net program.

### IMF contribution and international support
- Immediate financing:
  - $3.1 billion of the $7.6 billion will be available immediately to bolster reserves.
- Monitoring and ownership:
  - The program and its conditionality are based on targets and measures set by the Pakistani authorities for the next two years; IMF monitoring will assess progress and allow adjustments if circumstances change.
- Donor mobilization:
  - There is an urgent need to mobilize additional donor support to strengthen resilience, finance the expanded social safety net, and allow higher spending on development programs.
  - The Fund stands ready to participate in donor meetings to provide economic and financial analysis to underpin expanded support.
- IMF capacity:
  - The IMF has more than $200 billion in lendable resources and is ready to process loan proposals quickly through its Emergency Financing Mechanism.

### Risks and implementation
- Identified risks to program success:
  - Security and implementation uncertainties.
  - A more severe-than-anticipated slowdown in economic activity in trading partners.
  - Lower-than-expected private capital inflows.
- Implementation message:
  - "Sustained and forceful implementation will be key to the success of the program," said Juan Carlos Di Tata.

### Background and recent performance
- Pakistan context:
  - Population cited as 170 million people.
- Previous macroeconomic performance:
  - From 2000/01-2004/05, when Pakistan implemented two IMF-supported programs, real GDP growth averaged 5 percent a year with relative price stability.
  - Macroeconomic situation deteriorated significantly in 2007/08 and the first four months of 2008/09 due to adverse security developments, large exogenous price shocks (oil and food), and the global financial turmoil.
- Recent policy steps taken by authorities:
  - Energy subsidies have been cut.
  - Interest rates have been increased to tighten monetary policy.

*IMF Survey: Pakistan Gets $7.6 Billion Loan from IMF*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [Pakistan and the IMF](https://www.imf.org/external/country/PAK/index.htm)
- [Outlook for region](http://www.imf.org/external/pubs/ft/reo/2008/MCD/eng/mreo1008.htm)
- [Asian growth to slow sharply](http://www.imf.org/external/pubs/ft/survey/so/2008/CAR112408A.htm)
- [IMF Pakistan website](http://www.imf.org/external/country/PAK/rr/)
- [World leaders combat crisis](https://www.imf.org/external/pubs/ft/survey/so/2008/NEW111508A.htm)
- [Emergency Financing Mechanism](https://www.imf.org/external/pubs/ft/survey/so/2008/POL100908B.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar112408c_