Global rating agency Moody’s has indicated that the new International Monetary Fund (IMF) program will significantly enhance Pakistan’s funding prospects and provide reliable sources of financing.
In its recent report on Pakistan’s economy, Moody’s stated that the IMF program would not only improve access to funding from other countries but also facilitate support from international financial institutions.
However, the report also warned of increasing social tensions in Pakistan due to rising inflation, higher taxes, and potential adjustments in energy rates, which could complicate necessary reforms. The lack of a strong electoral mandate poses additional risks to consistently implementing difficult policy changes.
Moody’s cautioned that Pakistan’s external position remains fragile, with high financing needs presenting significant policy challenges over the next 3 to 5 years, compounded by weak governance and high social tensions that could hinder the government’s reform agenda.
A staff-level agreement has been reached between Pakistan and the IMF, with Moody’s highlighting that the country’s external financing needs for the current fiscal year are approximately $21 billion, increasing to about $23 billion by the fiscal year 2026-27.
Currently, Pakistan’s foreign exchange reserves stand at $9.4 billion, falling short of its requirements.
