Pakistan pledges US$7 billion IMF aid deal will be its last

The International Monetary Fund has agreed to loan Pakistan US$7 billion to bolster its faltering economy, with Islamabad pledging on Saturday it would be the last time it relied on relief from the Washington-based lender.

The South Asian nation agreed to the deal – its 24th IMF payout since 1958 – in exchange for unpopular reforms, including widening its chronically low tax base.

Pakistan last year came to the brink of default as the economy shrivelled amid political chaos following catastrophic 2022 monsoon floods and decades of mismanagement, as well as a global economic downturn.

It was saved by last-minute loans from friendly countries, as well as an IMF rescue package, but its finances remain in dire straits, with high inflation and staggering public debts.

“This programme should be considered the last programme,” Prime Minister Shehbaz Sharif told ministers and revenue officials in Islamabad. “We should tax those who are not being taxed.”

Islamabad wrangled for months with IMF officials to unlock the new loan announced on Friday, which will be paid out over three years subject to approval by the organisation’s executive board.

It came on condition of far-reaching reforms, including hiking household bills to remedy a permanently crisis-stricken energy sector and uplifting pitiful tax takings.

In a nation of more than 240 million people and where most jobs are in the informal sector, only 5.2 million filed income tax returns in 2022.

During the 2024-25 financial year that started at the beginning of July, the government aims to raise nearly US$46 billion in taxes, a 40 per cent increase from the previous year.

More unusual methods have seen the tax authority block 210,000 SIM cards of mobile users who have not filed tax