KARACHI: The IMF Executive Board will meet on Dec. 8, according to an official calendar, to consider and approve a $1.2 billion disbursement for Pakistan, a move economists say will further stabilize the cash-strapped country’s economy.

The upcoming board meeting comes nearly two months after the Fund reached a Staff-Level Agreement (SLA) with Pakistan for the second review of its $7 billion Extended Fund Facility (EFF) and the first review of its $1.4 billion Resilience and Sustainability Facility (RSF). The SLA followed a mission led by IMF chief Iva Petrova, who held discussions with Pakistani authorities during a Sept. 24–Oct. 8 visit to Karachi, Islamabad and Washington, DC.

Board approval would unlock about $1 billion under the EFF and $200 million under the RSF, bringing total disbursements under both arrangements to approximately $3.3 billion.

“It [board meeting] is scheduled early December, yes,” an IMF official privy to the matter told Arab News from Washington as he shared the board’s calendar. 

Pakistan has relied heavily on financing from bilateral partners such as Saudi Arabia, China and the United Arab Emirates, as well as multilateral lenders including the IMF, World Bank, Asian Development Bank and Islamic Development Bank, to support its recovery.

“The IMF Board’s expected approval of the $1.2 billion tranche on Dec. 8 will further stabilize Pakistan’s near-term external position and unlock additional official inflows,” Khaqan Najeeb, Pakistan’s former finance adviser, told Arab News.

“Continued engagement also reinforces macro stability, as reflected in recent improvements in inflation, the current account, and reserve buffers.”

Pakistan came close to sovereign default in mid-2023, when foreign exchange reserves fell below three weeks of import cover, inflation surged to a record 38 percent in May, and the country struggled to secure external financing after delays in its IMF program. Fuel shortages, import restrictions, and a rapidly depreciating rupee added to the pressure, while ratings agencies downgraded Pakistan’s debt and warned of heightened default risk. 

The crisis eased only after Pakistan reached a last-minute Stand-By Arrangement with the IMF in June 2023, unlocking emergency support and preventing an immediate default.

Since then, Pakistan has attempted to regain stability by sharply reducing inflation to 0.3 percent in April this year, while narrowing its current account deficit. The State Bank of Pakistan now holds $14 billion in foreign exchange reserves, equivalent to roughly two months of import cover.

Still, Najeeb noted that deeper structural reforms will be essential to sustain the stabilization effort.

“The real impact hinges on sustained fiscal discipline, deeper tax reforms, and decisive corrections in the energy sector,” he said.

“Markets have gotten a boost, with prevalent stability, yet structural follow-through is necessary to ensure pressure on reserves, inflation, and the exchange rate does not return.”