Daily Current Affairs (UPSC CSE) - 27th September 2024 (Part 2)

6. Pakistan Faces Economic Challenges Amid IMF Loan Approval

News Link: Pakistan Faces Economic Challenges Amid IMF Loan Approval

Syllabus: Prelims & Mains – General Studies Paper II (International Relations, India and Its Neighbourhood), General Studies Paper III (Economy and External Sector)

Context:

Pakistan has secured a $7 billion loan from the International Monetary Fund (IMF) to stabilise its economy. However, the nation is expected to face transitional economic pain, including austerity measures, structural reforms, and inflationary pressures, as it meets the IMF’s stringent conditions.

Detailed Analysis:

• IMF Loan and Its Conditions:

  • The IMF loan is aimed at stabilising Pakistan’s dwindling foreign reserves and addressing its balance of payments crisis.

  • Key conditions include fiscal consolidation, reduction of subsidies, tax reforms, and stricter control over public expenditure.

  • These measures are likely to result in short-term economic hardships, including rising inflation and unemployment, but are expected to restore macroeconomic stability in the long run.