This upward revision was primarily a reflection of stronger-than-expected growth in the third quarter, and “strong momentum” in the fourth quarter, the IMF said. File
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International Monetary Fund chief economist Pierre-Olivier Gourinchas speaks during the “World Economic Outlook” press briefing at the IMF/World Bank 2025 Annual Meetings in Washington, D.C., U.S., on October 14, 2025.
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The View from Washington: Who are Trump and Harris appealing to?

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The Hindu

In the third episode of The View from Washington, as the campaigning in the US elections heats up, we look at the gender divide among supporters of Kamala Harris and Donald Trump, the ethnic groups they have been targeting, campaigns in the “swing States”, and more.

We also analyse the IMF’s report on world economy as well as their forecast for India.

Also read: Indian Americans can be the margin of victory in key states: U.S. Democrat Pramila Jayapal

Presentation, direction: Sriram Lakshman

Editing: Kanishkaa Balachandran

The board of the International Monetary Fund on Wednesday agreed to loan Pakistan $7 billion to bolster its faltering economy, approving a relief package that Islamabad has pledged would be the last from the Washington-based lender.

The three-year loan program “will require sound policies and reforms” to support Pakistan’s ongoing efforts to strengthen its economy “and create conditions for a stronger, more inclusive, and resilient growth,” the IMF said in a statement.

The South Asian nation in July 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 shriveled 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 program should be considered the last program,” Prime Minister Shehbaz Sharif said in July when the loan deal was agreed.

Islamabad wrangled for months with IMF officials to unlock the new loan.

It came on the 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 over 240 million people where most jobs are in the informal sector, only 5.2 million filed income tax returns in 2022.

The IMF said Pakistan “has taken key steps to restoring economic stability with consistent reforms.” But “despite this progress, Pakistan’s vulnerabilities and structural challenges remain formidable,” it warned.

“A difficult business environment, weak governance, and an outsized role of the state hinder investment, which remains very low compared to peers,” it added.

Ethiopia’s currency plunged by 30% after the central bank sought an IMF bailout.
| Photo Credit: AFP

Cash-strapped ased foreign exchange curbs on Monday as part of a broad economic reform package as the International Monetary Fund approved a loan to the Horn of Africa nation seeking a multibillion-dollar bailout.

The value of the local currency, the birr, plunged by around 30% after the move by the country’s central bank.

“The reform introduces a competitive market-based determination of the exchange rate and addresses a long-standing distortion within the Ethiopian economy,” the National Bank of Ethiopia (NBE) said in a statement.

Africa’s second most populous country is pinning its hopes on a rescue package of at least $10.5 billion from external lenders including the IMF, but negotiations have been long and fraught.

The International Monetary Fund’s board on Monday approved a four-year loan programme worth around $3.4 billion to support the reforms, with around $1 billion immediately disbursed.

“This a landmark moment for Ethiopia” and the loan is a testament to the country’s “strong commitment to transformative reforms”, IMF Managing Director Kristalina Georgieva said in a statement.

Analysts had said the IMF was demanding several reforms of Ethiopia’s state-controlled economy, including floating the currency, in order to unlock the funding.

Battered in recent years by several armed conflicts, the Covid-19 pandemic and climate shocks, the African country has about $28 billion of external debt and is grappling with sky-high inflation at around 20% and a shortage of foreign currency reserves.

Under the shift to a market-based exchange rate regime, the National Bank of Ethiopia (NBE) said “banks are henceforth allowed to buy and sell foreign currencies from/to their clients and among themselves at freely negotiated rates”.

The central bank would, it said, make “only limited interventions to support the market in its early days and if justified by disorderly market conditions”.

More integration

After the announcement, the leading Commercial Bank of Ethiopia, which is wholly owned by the state, said the US dollar was buying 74.73 birr, compared to 57.48 on Friday.

Ethiopia has a highly active black market for currency trading, with the value of the birr at about half of the previous official rate, which used to be set daily by the NBE.

The central bank also foreshadowed the opening of Ethiopia’s securities market to foreign investors, saying details would be disclosed in the near future.

Among other measures, it said it would allow foreign exchange to be retained by exporters and commercial banks to boost supplies to the private sector, and announced the introduction of non-bank foreign exchange bureaus.

The government has also decided to temporarily subsidise some essential imports such as fuel, fertilisers, medicines and edible oils, as well as provide financial support for low-income families and bolster public-service salaries, it said.

“The FX reforms… represent a comprehensive set of measures that will support Ethiopia’s current stage of development and its increasing integration with the rest of the world.’

Senior Ethiopian economist Gutu Tesso warned the forex reforms could “exacerbate the economic crisis” by driving up inflation and would not in themselves attract foreign investment which required “ensuring reliable peace and security”.

But business analyst Samson Berhane was more optimistic, saying that the “financial cushion” from international lenders would help stabilise the country’s currency and that the gap between the official and black market rates could narrow, while the move could also help exports including mining.

Under the IMF deal, Pakistan has agreed to increase tax revenues through measures of 1 and a half per cent of GDP in FY25 and three per cent of GDP over the programme.

Pakistan and the International Monetary Fund (IMF) have agreed on a $7 billion aid package spread over more than three years to help the cash-strapped country deal with its chronic economic issues.

“Building on the economic stability achieved under the 2023 Stand-by Arrangement (SBA), IMF staff and the Pakistani authorities have reached a staff-level agreement on a 37-month Extended Fund Facility Arrangement (EFF) of about $7 billion,” the global lender said in an overnight statement, confirming the much-awaited deal subject to the approval by the IMF’s Executive Board.

The Washington-based lender further said the new programme aims to support the authorities’ efforts to cement macroeconomic stability and create conditions for stronger, more inclusive, and resilient growth in the cash-strapped country.

“This includes steps to strengthen fiscal and monetary policy and reforms to broaden the tax base, improve State Owned Enterprises’ (SOE) management, strengthen competition, secure a level playing field for investment, enhance human capital, and scale up social protection through increased generosity and coverage in the Benazir Income Support Programme (BISP),” it read.

The International Monetary Fund also stated that continued strong financial support from Pakistan’s development and bilateral partners would be critical for the programme to achieve its objectives.

An IMF team led by Nathan Porter, IMF’s Mission Chief to Pakistan, held discussions with the Pakistani side during the May 13-23, 2024, staff visit to Islamabad.

According to the statement, the new programme aims to capitalise on the hard-won macroeconomic stability achieved over the past year by furthering efforts to strengthen public finances, reduce inflation, rebuild external buffers and remove economic distortions to spur private sector-led growth.

About 10 million people at risk of slipping into poverty in Pakistan: World Bank

Under the deal, Pakistan has agreed to increase tax revenues through measures of 1 and a half per cent of GDP in FY25 and three per cent of GDP over the programme.

“Revenue collections will be supported by simpler and fairer direct and indirect taxation, including by bringing net income from the retail, export, and agriculture sectors properly into the tax system,” it said.

The statement said the federal and provincial governments agreed to re-balance spending activities, and at the same time, the provinces will take steps to increase their tax-collection efforts, including in sales tax on services and agricultural income tax.

The latest agreement is the country’s latest turn to the global lender for help in propping up its economy and dealing with its debts through big bailouts. Earlier this year, the IMF approved the immediate release of the final $1.1 billion tranche of a $3 billion bailout to Pakistan.

Finance Minister Muhammad Aurangzeb said the government planned to seek a long-term loan to help stabilise the economy after the end of that bailout package.

The deal was announced just two weeks after Pakistan approved a tax-laden budget for the 2024-25 fiscal year with the approval of the IMF.

Analysts said the new budget of about $68 billion — up from $50 billion in the last fiscal year — was aimed at qualifying for a long-term IMF loan of $6 billion to $8 billion to help stabilise the economy. Pakistan in 2023 nearly defaulted on the payment of foreign debts.

New Delhi:

The International Monetary Fund (IMF) released an Artificial Intelligence Preparedness Index (AIPI) Dashboard on their website on Tuesday, tracking 174 economies globally for AI readiness.   

The Index has categorised each country into Advanced Economy (AE), Emerging Market Economy (EM), and Low-Income Country (LIC). Singapore (0.80), Denmark (0.78), and the United States (0.77) are among the highest-rated AEs, with India categorised as an EM with a 0.49 rating. India ranks 72 in a total of 174 countries, with Bangladesh (0.38) on 113, Sri Lanka (0.43) on 92, and China (0.63) on 31.     

The rating for each country is given based on the assessment of readiness in four key areas – digital infrastructure, human capital and labour market policies, innovation and economic integration, and regulation.

Earlier this year, the IMF published a blog based on their research paper on 14 January, stating that AI could endanger 33 percent of jobs in AEs, 24 percent in EMs, and 18 percent in LICs. Overall, 40 percent of the jobs around the world will be affected by AI, replacing some and complimenting others.

“On the brighter side, it also brings enormous potential to enhance the productivity of existing jobs for which AI can be a complementary tool and to create new jobs and even new industries,” says Economist Giovanni Melina, in the IMF article from Tuesday.

“Under most scenarios, AI will likely worsen overall inequality, a troubling trend that policymakers can work to prevent. To this end, the dashboard is a response to significant interest from our stakeholders in accessing the index. It is a resource for policymakers, researchers, and the public to better assess AI preparedness and, importantly, to identify the actions and design the policies needed to help ensure that the rapid gains of AI can benefit all,” wrote Melina.

Representational image only.
| Photo Credit: AFP

Pakistan has decided to seek a rollover of around $12 billion debt from key allies such as China in the 2024-25 fiscal year to meet a whopping $23 billion worth of gap in its external financing as the federal government aims to achieve budget targets before the expected arrival of an IMF team to the cash-strapped country.

According to the Finance Ministry insiders, $5 billion from Saudi Arabia, $3 billion from the UAE and $4 billion from China will be rolled over, adding that the estimate of further new financing from China would also be included in the next financial year’s budget, The Express Tribune newspaper reported.

Pakistan will receive more than $1 billion from the International Monetary Fund (IMF) under the fresh loan programme, whereas new financing from the World Bank and Asian Development Bank has also been included in the estimated budget.

According to the Finance Ministry sources, new loan programme agreements will be made with financial institutions. The federal government aims to achieve budget targets before the anticipated arrival of the IMF review mission in Pakistan.

Negotiations for a new loan programme with the global lender are expected to commence in mid-May ahead of the budget which will be presented in June. The Finance Ministry sources said the Ministries had been instructed to complete the targets before the negotiations on the new loan programme.

They added that the details would be given to the IMF delegation when all the important targets were met. It has also been decided to have the budget strategy paper approved by the federal Cabinet before the IMF review mission arrives in the country.

According to the sources, the Finance Ministry has started preparing the budget to set the targets for debt repayment, defence budget and tax collections. Besides, the development and ongoing budget targets will also be determined, according to the paper.

Pakistan has been suffering the chronic ailment of how to meet external liabilities. Traditionally, it depended on remittances, export proceeds and foreign loans to meet its liabilities. But exports haven’t increased to match the imports and avenues of foreign aid have gradually dried up, putting pressure on the Rupee and essential imports.

Last year, it narrowly avoided default due to a timely short-term loan agreement with the International Monetary Fund which provided $3 billion during nine months. The country is once again looking towards the global lender to provide a fresh loan to keep it moving.

In the trying economic conditions, Pakistan has been heavily supported by the remittances its workers living and working around the globe send. The country received the second-highest remittances of the ongoing 2023-24 fiscal at $2.8 billion in April 2024.

According to the State Bank of Pakistan (SBP), the remittances increased by 3.5% to $23.8 billion cumulatively in the first 10 months of FY24 compared to the same period last year.

Remittance inflows during April 2024 were primarily sourced from Saudi Arabia ($712 million), the United Arab Emirates ($542.3 million), the United Kingdom ($403.2 million) and the United States of America ($329.2 million), according to the bank.

The remittances earlier had peaked near $3 billion in the prior month of March 2024, marking a 23-month high.

Separately, the Dawn newspaper reported that Pakistan is engaging with the Chinese leadership for the revival of more than 1800-megawatt of hydropower projects (HPPs) and investment from fresh Chinese companies in the country’s transmission and distribution network as part of the second phase of the China-Pakistan Economic Corridor (CPEC).

The authorities are trying to convene a meeting of the Joint Cooperation Committee (JCC) of the Cabinet on May 22-23 so that Prime Minister Shehbaz Sharif’s upcoming visit to Beijing early next month will be a success.

A high-level delegation led by Planning Minister Ahsan Iqbal is currently in China to pursue existing investors and financial institutions and tap into more firms in the transmission and distribution network as part of CPEC’s second phase.

In his meeting, Mr. Iqbal sought China’s continued cooperation in the early implementation of the Azad Pattan and Kohala hydropower projects. The two sides agreed to hold the next round of the Joint Working Group meeting on Energy (JEWG) soon.

Pakistan Finance Minister Muhammad Aurangzeb. File
| Photo Credit: Reuters

Pakistan has formally sought a bailout package in the range of $6-$8 billion with the possibility of augmentation through climate financing from the IMF, a media report said on April 20.

Cash-strapped Pakistan also requested to dispatch the International Monetary Fund (IMF) review mission next month to firm up details of the next bailout package for three years under the Extended Fund Facility (EFF). However, the exact size and timeframe of the new package will only be determined after evolving consensus on the major contours of the next programme in May 2024, Geo News reported from Washington.

A high-level Pakistani delegation led by Finance Minister Muhammad Aurangzeb is currently visiting Washington to attend the annual spring meetings of the IMF/World Bank.

Although Pakistani authorities are pitching a rosy picture of the economy, the IMF in its latest Regional Economic Outlook (REO) released by Middle East and Central Asia (ME and CA) said the cash-strapped country’s external buffers deteriorated, mostly reflecting ongoing debt service, including Eurobond repayments.

“Where inflationary pressures persist, monetary policy should remain tight and follow a data-dependent approach (Egypt, Kazakhstan, Pakistan, Tunisia, Uzbekistan), while closely monitoring risks of a reversal of inflation developments,” it added.

After contracting in 2023, growth in Pakistan is projected to rebound to 2% in 2024, supported by continuing positive base effects in the agriculture and textile sectors.

Meanwhile, Finance Minister Aurangzeb told the World Bank in Washington that with the reform agenda fully implemented in key areas, Pakistan’s economy has the potential to grow to $3 trillion by 2047.

Implementing structural reforms

Pakistan’s current $3 billion arrangement with the IMF runs out in late April and the government is seeking a longer and bigger loan to help bring permanence to macroeconomic stability and an umbrella under which the country can execute structural reforms.

The IMF however emphasised that prioritising reforms to revitalise the Pakistani economy outweighs the size of the new loan package being negotiated.

IMF Managing Director Kristalina Georgieva speaks during a press briefing at the International Monetary and Financial Committee (IMFC) plenary session at the IMF and World Bank’s 2024 annual Spring Meetings in Washington, U.S., April 19, 2024.
| Photo Credit: Reuters

Shareholders of the International Monetary Fund agreed on the importance of addressing challenges faced by low-income countries, many of which are facing unsustainable debt burdens, IMF Managing Director Kristalina Georgieva said on April 19.

Multiple reports from the IMF and the World Bank this week sounded the alarm about economic developments and prospects in low-income developing countries, which are still grappling with the aftermath of the Covid-19 pandemic and other shocks.

The IMF lowered its 2024 growth forecast for low-income countries as a group to 4.7% from an estimate of 4.9% in January. In a separate report, the World Bank said half of the world’s 75 poorest countries were experiencing a widening income gap with the wealthiest economies for the first time this century in a historical reversal of development.

Ms. Georgieva said the IMF was working to reinforce its ability to support low-income countries hit hardest by recent shocks, including through a 50% quota share increase and by adding resources to its Poverty Reduction and Growth Trust.

Ms. Georgieva and Saudi Arabia’s Finance Minister Mohammed Al-Jadaan, who chairs the IMF’s steering committee, said internal reforms adopted by the IMF this week should help make the debt restructuring process speedier and smoother.

Also read: Explained | Understanding IMF bailouts

Impact of high debt levels on low-income countries

Ms. Georgieva, in a meeting of the Global Sovereign Debt Roundtable hosted by the IMF and the World Bank this week, said there was progress on setting timelines for debt restructurings and ensuring comparability of treatment for various creditors.

She said high debt levels posed a huge burden for low-income countries, including many in Sub-Saharan Africa, where countries face debt service payments of 12% on average, compared to 5% a decade ago. High interest rates in advanced economies have lured away investments, and raised the cost of borrowing.

“What is heartbreaking is that in some countries debt payments are up to 20% of revenues,” she said, adding that this meant those countries had far fewer resources to invest in education, health, infrastructure and jobs. Affected countries needed to increase their domestic revenues by raising taxes, continuing to fight inflation, paring back spending and developing local capital markets, she said.

The Bulgarian economist said it was vital for these countries to make themselves more attractive to investors, and said the IMF was engaging with countries to help them do that.

U.S. Treasury Undersecretary Jay Shambaugh raised concerns about the situation facing low-income countries last week, warning China and other emerging official creditors against free-riding by curtailing loans to low-income countries just as the IMF or multilateral development banks were pouring funds in. Almost 40 countries saw external public debt outflows in 2022, and the flows likely worsened in 2023, he said.