After much delay and anticipation, the Executive Board of the International Monetary Fund (IMF) on Monday completed the combined 7th and 8th reviews of a loan facility for Pakistan, allowing immediate disbursement of $1.1 billion. In addition to this, the IMF has also approved an increase in the loan size by $0.5 billion and extended its expiry date to June 2023. As a result of this, the programme size has now been increased to $4.988 billion. This announcement will undoubtedly calm nerves around the country given the downward spiral of the economy and unprecedented devastation caused by the floods all across the country.

According to the statement issued by the IMF headquarters, the immediate priority of the programme is now to continue the steadfast implementation of the recently approved budget for FY23, adherence to a market-determined exchange rate, and pursuit of a proactive and prudent monetary policy. These stabilisation measures will continue to be painful, especially considering how there are more price increases in store when it comes to electricity prices and taxes on petroleum products, however, these are necessary for us to ensure that we can end this cycle of returning to the IMF every couple of years.

In addition to this, it is also vital for us to expand the social safety net to ensure the protection of the most vulnerable and enact structural reforms to improve the performance of state-owned enterprises (SOEs) and governance. These very same sentiments have also been echoed by PM Shehbaz Sharif, who is right in saying that there is a lot of hard work to be done for Pakistan to be self-sufficient.

While the revival of the IMF programme is critical for the economy, the economic stability it will instill is just transitory and we will have to implement corrective policies and reforms to regain macroeconomic stability, address imbalances and lay the foundation for inclusive and sustainable growth. Structural reforms in the energy and tax sectors will be essential as they will considerably reduce the need for state resources, and also help in addressing the current account deficit which must be a key priority for the long term.