The International Monetary Fund (IMF) on Wednesday reached a staff-level agreement with Pakistan, paving the way for the release of $1.2 billion after approval from the Fund’s Executive Board.
The IMF praised Pakistan’s recent economic progress, including its first current account surplus in 14 years.
The IMF announced that it has reached a staff-level agreement (SLA) with Pakistan following discussions held in Islamabad from September 24 to October 8, led by mission chief Iva Petrova.
Under the agreement, Pakistan will gain access to $1 billion through the Extended Fund Facility (EFF) and $200 million via the Resilience and Sustainability Facility (RSF), bringing total disbursements under both programmes to approximately $3.3 billion.
Economic recovery on track
According to the IMF statement, Pakistan’s EFF-supported economic programme is “entrenching macroeconomic stability and rebuilding market confidence.” It noted that the FY25 current account recorded a surplus—the first in 14 years—reflecting progress in stabilising the economy.
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The Fund added that Pakistan’s fiscal primary balance had surpassed programme targets, inflation remained contained, and external buffers were strengthening amid improving financial conditions.
IMF praises fiscal discipline
While acknowledging Pakistan’s commitment to sustaining fiscal discipline and reform, the IMF also expressed concern over the recent floods that have affected nearly seven million people, caused over 1,000 deaths, and severely damaged farmland and infrastructure.
The lender said the devastation had lowered GDP projections for FY26 to around 3.25–3.5%, underscoring the need for stronger climate resilience policies.
Policy commitments and reforms
The IMF noted that Pakistani authorities remain committed to achieving a primary budget surplus of 1.6% of GDP in FY26, while maintaining a tight, data-driven monetary policy to keep inflation within the State Bank’s 5–7% target range.
Key reforms include:
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Strengthening revenue mobilisation through the creation of a new tax policy office.
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Restoring energy sector viability by ensuring cost-reflective tariffs and preventing circular debt.
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Advancing privatisation and efficiency in distribution and generation companies.
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Boosting private sector development and trade competitiveness.
Under the RSF, Pakistan also aims to improve resilience to climate change through green mobility, disaster risk financing, and better water system management.
IMF expresses sympathy and appreciation
The IMF expressed its sympathy for those affected by the floods and thanked the Pakistani government, private sector, and development partners for their cooperation and hospitality during the mission.
It reiterated the importance of consistent policy implementation and comprehensive reforms to safeguard economic recovery and protect the most vulnerable segments of society.
Following the Executive Board’s approval, Pakistan will receive $1.2 billion in the next tranche, marking another milestone in its ongoing economic reform journey.
The IMF’s latest assessment signals cautious optimism, highlighting Pakistan’s steady recovery, improved fiscal performance, and resilience-building measures, while urging vigilance against future climate and financial risks.
