The COVID-19 pandemic has had severe social and political implications; however, it may be argued that the greatest impact it has had is on the global economy. Developing countries like Pakistan and Afghanistan have had it even tougher, particularly when it came to financing economies as both countries face a large fiscal deficit and require aid and funding. Most recently, to recover from the economic losses, Pakistan has entered into an agreement with the International Monetary Fund (IMF).
The agreement entails the release of nearly $500 million in funds over reforms. The IMF said in their statement, that Pakistan’s progress had been disrupted due to the pandemic and this current package will ensure “debt sustainability” and advance structural reform. In simpler terms, this means that this current agreement will ensure that Pakistan is able to pay its loans without additional economic assistance and without going into default.
The Finance Minister of Pakistan has claimed that this is a “good development for Pakistan” and that this agreement will help Pakistan in overcoming the challenges it faces because of the global outbreak of COVID-19. The agreement is undertaken in hopes of generating more interest in the economy and attracting more investment.