Pakistan has received “significant financing assurances” from China, Saudi Arabia and the United Arab Emirates linked to a new International Monetary Fund program that go beyond a deal to roll over $12 billion in bilateral loans owed to them by Islamabad, an IMF official said on Thursday.

IMF Pakistan Mission Chief Nathan Porter declined to provide details of additional financing amounts committed by the three countries but said they would come on top of the debt rollover.

“I won’t go into the specifics, but UAE, China and the Kingdom of Saudi Arabia all provided significant financing assurances joined up in this program,” Porter told reporters on a conference call.

The IMF’s Executive Board on Wednesday approved a new $7 billion, 37-month loan agreement for Pakistan that requires “sound policies and reforms” to strengthen macroeconomic stability. The approval releases an immediate $1 billion disbursement to Islamabad.

The crisis-wracked South Asian country has had 22 previous IMF bailout programs since 1958.

Porter said Pakistan has staged a “really remarkable” economic turnaround since mid-2023, with inflation down dramatically, stable exchange rates and foreign reserves that have more than doubled.

“So what we’ve seen is the benefits of undertaking good policies,” Porter said, adding that the challenge now was to build stronger and sustained growth by keeping monetary, fiscal and exchange rate policy consistent, raising more taxes and improving public spending.

Last year, Pakistan achieved its first primary budget surplus in 20 years, and the program calls for growing that to 2% of gross domestic product. Porter said it depends in part on reforms to improve collections from under-taxed sectors such as retailers.

The next review of the loan would likely take place in March or April of 2025, based on end-2024 performance criteria, Porter said.

(Reuters)