What Happened Pakistan's government clinched a multibillion loan May 12 from the International Monetary Fund (IMF) to help mitigate the country's low foreign exchange reserves, as well as its steep fiscal and current account deficits . The new three-year Extended Fund Facility arrangement includes a $6 billion loan that will be disbursed over 39 months, contingent upon Islamabad enacting tough structural reforms. Such austerity measures include hiking fuel and electricity prices; rescinding $4.9 billion in tax exemptions over two years; and further raising interest rates while allowing the rupee to weaken as part of a free-floating exchange rate. Why It Matters The latest IMF agreement fits into the Pakistani government's broader external funding effort that involves loans from partner countries including China, Saudi Arabia and the United Arab Emirates, as well as other lenders such as the World Bank.