Pakistan has reached a deal for a fresh $7 billion loan with the International Monetary Fund (IMF), the global lender has announced.
In exchange for the 37-month loan, which Islamabad badly needs to prop up its sputtering economy, the Pakistani government pledged to implement more unpopular reforms.
The loan, the 24th from the IMF to Pakistan in more than six decades, is "subject to approval by the IMF's executive board," the IMF said in a statement.
The deal's main aim is to back the Pakistani government's steps to cement macroeconomic stability while putting in place the necessary conditions for resilient growth.
"This includes steps to strengthen fiscal and monetary policy and reforms to broaden the tax base, improve state-owned enterprises' management, strengthen competition, secure a level playing field for investment, enhance human capital, and scale up social protection through increased generosity," the statement said.
The deal came after months of negotiations, and on condition that Pakistan improve its tax collection system. Only 5.2 million people filed income-tax returns in 2022 in a country of some 236 million people.
While around 40 percent of the population already lives below the poverty line, the World Bank said in April it feared that 10 million additional Pakistanis would fall below this threshold.
Last year, Islamabad was close to default as its economy was hit hard by political chaos, the aftermath of huge monsoon floods in 2022, and decades of mismanagement.
Pakistan's financial sector remains very fragile amid high inflation and a huge public debt.
Under the program, "we need to ensure structural reforms and bring self-sustainability in areas of public finance, energy, and state-owned institutions," Finance Minister Muhammad Aurangzeb was quoted by Geo News as saying on July 13.