Moody’s Ratings shared news on Tuesday. The new IMF deal will help Pakistan get money. But there are still risks if Pakistan doesn’t follow rules strictly.
The International Monetary Fund and Pakistan agreed on a 37-month plan. The plan is worth about $7 billion. They signed it on July 12. The IMF board must approve it. No date set for this yet.
“If approved, the new International Monetary Fund plan will help Pakistan get funds,” Moody’s said. The program will offer reliable money from the IMF. It will also help get funds from other partners.
“The government must follow reforms to get money over time. This will lower risks,” the agency said.
But Moody’s warned about social problems. High living costs might rise more. This could come from higher taxes and energy prices. These issues could hurt reforms.
The new International Monetary Fund plan includes many changes. Pakistan must widen the tax base. They must cut tax breaks. They must also change energy prices to fix the energy sector.
IMF Funding Shortfall Looms for Pakistan, Warns Moody’s
Other steps include improving state-owned companies. They might sell some and will cut farm prices and subsidies. IMF will work on anti-corruption and transparency and will slowly open up trade.
Moody’s also said the coalition government might struggle. They might not have enough support to keep making tough changes.
An IMF report from May gave numbers. Pakistan needs about $21 billion for 2024-25. It needs about $23 billion for 2026-27. But, Pakistan only had $9.4 billion in reserves by July 5. This is not enough.
Pakistan’s situation is still weak. It needs a lot of money over the next few years. Its economy can easily face problems.
Moody’s said weak governance and high social tensions make things worse. These issues might stop the government from making needed changes. This could stop them from getting more funds from the International Monetary Fund.
To read our blog on “Pakistan’s debt sustainability is surging at risk, Moody’s warning,” click here
