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IMF deal boosts Pakistan’s funding prospects, says Moody’s

News Desk by News Desk
May 13, 2025
in Latest, National
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ISLAMABAD: Global rating agency Moody’s stated that Pakistan’s staff-level agreement with the International Monetary Fund (IMF) “enhances funding prospects, but the ability to maintain reforms is crucial to reducing liquidity risks.”

The Shehbaz Sharif-led government and the IMF secured a three-year, $7 billion aid package deal on Saturday, according to the Washington-based institution, providing much-needed relief to the nation.

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Commenting on the new IMF deal, Moody’s stated, “the new IMF programme will improve Pakistan’s (Caa3 stable) funding prospects.”

“The program will offer reliable financing from the IMF and stimulate funding from other bilateral and multilateral partners to address Pakistan’s external financing requirements.”

However, the agency warned that Pakistan’s ability to maintain reform implementation will be crucial for unlocking financing throughout the IMF program, thereby achieving sustainable reduction of government liquidity risks.

Regarding the terms of the new program, Moody’s noted it “includes conditions for extensive reforms, such as expanding the tax base, eliminating exemptions, adjusting energy tariffs promptly to enhance sector viability, improving management of state-owned entities (SOEs), privatizing, phasing out agricultural support prices and related subsidies, and gradually liberalizing trade policies.”

However, the agency acknowledged that social tensions stemming from the high cost of living could impact reform implementation, particularly concerning increased taxes and upcoming adjustments to energy tariffs.

“Furthermore, concerns persist that the coalition government may lack a sufficiently strong electoral mandate to consistently implement challenging reforms,” the comment stated.

As per the IMF’s May report, Pakistan needs about $21 billion to cover its external funding needs for the fiscal year ending in June 2025, and around $23 billion for the fiscal year 2026-27.

Moody’s noted that the country’s current foreign reserves “are much lower than what is needed.”

Tags: Funding ProspectsMoody's Pakistan StatementPakistan IMF Agreement
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