KARACHI: The International Monetary Fund (IMF) said on Friday that its board had completed reviews of some of its agreements with Pakistan, clearing the way for the South Asian nation to access about $1.32 billion in fresh funding immediately.
The IMF board completed the third review of its $7 billion Extended Fund Facility (EFF) and the second review of a $1.4 billion Resilience and Sustainability Facility (RSF), allowing the authorities to draw around $1.1 billion and $220 million, respectively. This brings total disbursements under the two arrangements to about $4.8 billion.
Pakistan’s policy efforts have delivered significant progress in stabilizing the economy and rebuilding confidence amid a challenging global environment. Fiscal performance has been strong, with a primary surplus of 1.6 percent of GDP expected to be achieved in FY26, in line with targets, according to the lender.
Inflation has increased as higher global commodity prices have passed through to domestic energy prices, while the country’s gross reserves stood at $16 billion at end-December, up from $14.5 billion at end-June 2025, and are projected to continue to be rebuilt in the next year and over the medium term.
“Pakistan’s strong program implementation under the EFF arrangement has continued, which has supported macroeconomic stability and the rebuilding of fiscal and foreign exchange buffers. GDP growth accelerated, inflation remained contained, and the current account was broadly balanced in the first nine months of FY26,” said Nigel Clarke, the IMF deputy managing director.
“Amid a more challenging and highly uncertain external environment since the onset of the war in the Middle East, Pakistan needs to maintain strong macroeconomic policies while accelerating reform efforts, which are critical to managing further shocks and fostering higher sustainable medium-term growth.”
Pakistan has relied heavily on IMF support in recent years to stabilize its economy, shore up reserves and avoid a balance-of-payments crisis. The latest approval comes as Islamabad faces renewed pressure from rising global oil prices and supply disruptions linked to tensions around the Strait of Hormuz during the ongoing Iran conflict.
In April, Pakistan’s central bank raised its key policy rate by 100 basis points to 11.5 percent, marking its first hike in almost three years.
“The State Bank of Pakistan has acted proactively to maintain an appropriately tight monetary policy stance aimed at keeping inflation expectations anchored and should continue to carefully monitor potential second-round effects on domestic prices, wages, and expectations,” Clarke noted.
“Exchange rate flexibility should be the main shock absorber, particularly given the need to continue rebuilding reserves. Efforts to deepen the FX market should continue, including through a carefully-sequenced medium-term FX liberalization.”
In an environment of high and volatile commodity prices, recent improvements in energy sector finances need to be sustained by keeping domestic fuel, electricity, and gas prices in line with costs, according to the IMF.
Continued reform efforts to reduce costs and address inefficiencies will safeguard the sector’s viability and improve Pakistan’s competitiveness.
“Reducing Pakistan’s vulnerability to climate shocks will enhance macroeconomic and fiscal sustainability,” Clarke said.
