IMF Loan Success: Pakistan Wins Applause from Foreign Investors for Economic Resilience

IMF Loan Success: Pakistan Wins Applause from Foreign Investors for Economic Resilience

Karachi, July 24, 2023 – Foreign investors have expressed their appreciation for Pakistan’s successful efforts in securing a $3 billion IMF loan under the Stand By Agreement (SBA).

The approval of the IMF SBA for the next nine months has been hailed as a crucial step towards economic stability and progress for the country.

Amir Paracha, President of the Overseas Investors Chamber of Commerce and Industry (OICCI), a representative body of foreign investors in Pakistan, commended Prime Minister Shehbaz Sharif and his finance team for their timely leadership and proactive approach in safeguarding the economy from additional shocks.

The rapid lending from the IMF, amounting to $1.2 billion, combined with support from friendly countries, has contributed to an uplift in Foreign Exchange reserves, bolstering the nation’s economic outlook. This positive development is reflected in the performance of the Pakistan Stock Exchange, the currency market, and the overall business environment.

Additionally, foreign investors have applauded the recent upgrade of Pakistan’s long-term foreign currency Issuer Default Rating (IDR) to ‘CCC’ from ‘CCC-‘ by Fitch Rating agency. As a result, Pakistan Bonds in the international market have seen a rally.

While OICCI members remain concerned about the long pending remittances of dividends and other charges, they continue to show support for the government’s actions. Having operated in Pakistan for over 75 years, these responsible foreign investors look forward to the gradual easing of strict controls on imports and remittances.

Moving forward, the OICCI President emphasized the need to strengthen the country’s revenue base by aggressively broadening the tax base, reducing governance costs, and implementing reforms in key state institutions, including revenue authorities, state-owned enterprises, and regulatory bodies at both the federal and provincial levels.

Furthermore, the government is urged to streamline the corporate sector’s tax burden, especially with the introduction of new taxes such as the Super Tax, which has effectively increased the tax on organized businesses to over 40 per cent, the highest in the region.

Amir Paracha concluded by stating that Pakistan has the potential to attract significant foreign direct investment (FDI), but it is currently receiving an insignificant amount. Despite this, OICCI members have invested over $22 billion in Pakistan over the past decade, demonstrating their commitment to supporting the country’s economic and investment potential.

The OICCI is a collective voice representing major foreign investors in Pakistan, comprising over 200 members from 31 different countries, spanning 14 sectors of the economy. These investors contribute around one-third of Pakistan’s total tax revenue, transfer technology and skills, and provide employment opportunities for a considerable number of people.

Approximately one-fourth of OICCI member companies are listed on the Pakistan Stock Exchange, and many members are associated with Global Fortune 500 companies. In addition to their business operations, OICCI members actively engage in corporate social responsibility activities, benefiting 46 million people from underprivileged communities.