The International Monetary Fund (IMF) announced on Tuesday that it has reached a staff-level agreement with Pakistan to release $1.2 billion in new funding following the completion of its latest program review. The agreement still requires approval from the IMF Executive Board.
The deal includes $1 billion under the Extended Fund Facility (EFF) and $200 million under the Resilience and Sustainability Facility (RSF). Once approved, the total disbursement under these arrangements will reach approximately $3.3 billion.
The IMF stated that the review discussions were held in Islamabad from September 24 to October 8, and it praised Pakistan’s efforts to restore economic stability and market confidence. It also confirmed that Pakistan’s economic program is on track, and for the first time in 14 years, the country recorded a current account surplus during fiscal year 2025.
The IMF acknowledged Pakistan’s commitment to fiscal discipline and noted that the country showed flexibility in implementing the program. The government has committed to achieving a primary budget surplus of 1.6% of GDP by fiscal year 2026.
The State Bank of Pakistan (SBP) aims to maintain inflation within its target range of 5–7%, and the central bank will adjust policies as needed. However, the IMF noted that the recent devastating floods have impacted Pakistan’s economic outlook, particularly in the agriculture sector. As a result, the GDP growth forecast for FY 2026 has been revised down to 3.25–3.5%.
The IMF emphasized that these floods highlight Pakistan’s vulnerability to climate change, underscoring the importance of building climate resilience.
In the energy sector, Pakistani authorities have pledged to stop the accumulation of circular debt by ensuring cost-reflective tariffs, and to improve the financial health of the power sector.
To strengthen climate resilience, Pakistan will focus on green mobility projects, improve disaster-response financing, and enhance water system management.
In its statement, the IMF also thanked Pakistani authorities for their cooperation and expressed deep sympathy for the victims of the recent floods.
