Islamabad (TDI): The International Monetary Fund (IMF) announced on Tuesday that it has reached a staff-level agreement with Pakistan, paving the way for the release of $1.2 billion in financial assistance following a successful review of the country’s ongoing loan programs.
Once approved by the IMF Executive Board, Pakistan will receive $1 billion under the Extended Fund Facility (EFF) and another $200 million through the Resilience and Sustainability Facility (RSF). Together, these will bring total disbursements under the two programs to roughly $3.3 billion.
The announcement followed two weeks of discussions in Islamabad, held between September 24 and October 8, led by IMF Mission Chief Iva Petrova. Talks focused on reviewing Pakistan’s progress under its 37-month EFF and 28-month RSF arrangements.
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According to the IMF, Pakistan’s EFF-supported program has helped stabilize the economy and restore investor confidence. “The recovery remains on course, with the current account for FY25 posting its first surplus in 14 years,” the Fund noted.
It praised Islamabad’s consistent implementation of reform measures, saying authorities remain determined to strengthen fiscal discipline, maintain price stability, and advance structural and energy-sector reforms.
The IMF highlighted several positive indicators, including a fiscal primary balance exceeding targets, contained inflation, and improved external reserves, supported by easing financial pressures and narrowing sovereign spreads.
However, the Fund also pointed to challenges. Recent floods that affected nearly seven million people and caused extensive damage to housing, crops, and infrastructure have dampened short-term growth prospects. The IMF lowered Pakistan’s FY26 GDP projection to between 3.25% and 3.5%, citing the disaster’s impact on agriculture.
It added that the floods reinforced Pakistan’s exposure to climate-related risks and emphasized the urgency of building climate resilience into economic planning.
Pakistani authorities reaffirmed their commitment to prudent fiscal management and reform continuity. Their key priorities include fiscal consolidation, poverty reduction, enhanced revenue mobilization, and maintaining a tight, data-driven monetary policy to keep inflation within the 5–7% target range.
In the energy sector, the government has pledged to stop the build-up of circular debt by enforcing cost-reflective tariffs, improving efficiency in power distribution, and accelerating privatization.
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Reforms are also under way to improve tax administration, strengthen federal-provincial coordination, and boost private-sector competitiveness. A new tax policy office has been established to streamline regulations and minimize reliance on one-off tax measures.
Under the RSF, Pakistan aims to invest in climate-resilient infrastructure, green transportation, water resource management, and disaster-risk financing to mitigate future shocks.
The IMF expressed appreciation for the cooperation shown by Pakistani officials and extended sympathy to those affected by the floods, noting that the mission benefited from “constructive engagement with the authorities, private sector representatives, and development partners.”
