IMF opened its coffers for Pakistan; praised it but also warned it

The International Monetary Fund has approved a fresh seven-billion-dollar bailout package for cash-starved Pakistan. It has allowed the immediate release of the first tranche of less than 1.1 billion dollars worth of loans to deal with the economic crisis.

The staff-level agreement with Pakistan was approved by the IMF board that met in Washington on Wednesday. The Pakistani government had earlier promised to reform the farm income tax, transfer some of the financial responsibilities to the provinces, and put a check on subsidies.

The Prime Minister's Office in Pakistan has just confirmed that Islamabad has received a formal notification from the International Monetary Fund (IMF), and on the approval of a 37-month EFF of $7 billion. This is going to be the 25th IMF program and the sixth EFF that the country is getting since 1958.

The IMF also praised Pakistan in the statement issued on Thursday that it has taken several major steps for economic betterment, which fast-tracked the development. Also, the public got relief from the inflation as it came down to single digits. The foreign exchange market is peaceful, which helped Pakistan to replenish the reserve.

However, the IMF has also expressed equal concern in some aspects. It warns that with Pakistan marking a beginning to move on the road to progress, some of its intrinsic structural challenges remain. For example, it faces a difficult business environment. Coupled with this, investment is being deterred due to a weak government.

The IMF said that government officials are also spoiling the work by creating obstacles. At the same time, the tax base also remains very small. Also, the government is not spending enough on education and health.