KARACHI: Pakistan and the International Monetary Fund (IMF) have formally begun talks to unlock $1.2 billion disbursements under the country’s bailout program and a climate-focused financing arrangement, the Pakistani finance ministry said on Tuesday, as Islamabad seeks to stay on track with its economic reform commitments.

The talks cover a review of Pakistan’s 37-month, $7 billion Extended Fund Facility (EFF), approved in Sept. 2024, and a separate review of a $1.4 billion Resilience and Sustainability Facility (RSF). A successful review of the EFF could unlock about $1 billion for Pakistan, while the RSF review could release around $200 million, bringing the combined potential disbursement to roughly $1.2 billion.

The negotiations come as Pakistan grapples with rising fuel costs and economic pressures stemming from the conflict that began with US and Israeli strikes on Iran in February. Disruptions to oil supplies from the Gulf have increased concerns over the country’s import bill and domestic prices, complicating efforts to sustain its economic recovery.

“Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, held a kick-off meeting with the International Monetary Fund (IMF) mission, led by Ms. Iva Petrova,” the finance ministry said on Tuesday. “The IMF mission is in Islamabad for the fourth review of Pakistan’s Extended Fund Facility (EFF) arrangement and the third review of the Resilience and Sustainability Facility (RSF).”

The ministry did not share further details. Pakistani media last week reported talks between IMF officials and the State Bank of Pakistan (SBP) representatives in the southern port city of Karachi.

Pakistan entered the 37-month bailout program in 2024, following years of pressure on its foreign exchange reserves and public finances. The arrangement supports efforts to raise tax revenue, improve the finances of the power sector and reform state-owned companies. The climate facility, approved in May 2025, supports changes to disaster planning, water management and the way climate risks are considered in public investment. It provides financing linked to those reforms, rather than a fund reserved solely for rebuilding after floods.

The IMF last approved disbursements in May, releasing about $1.1 billion under the economic program and $220 million under the climate facility. It said Pakistan had received about $4.8 billion under the two arrangements by that point.

Last week, IMF Managing Director Kristalina Georgieva gave an upbeat assessment of Pakistan’s economic reform program, saying continued implementation could help accelerate growth in the South Asian nation. She made the remarks after her meeting with Prime Minister Shehbaz Sharif on the sidelines of the United Nations General Assembly in New York, where the two discussed Pakistan’s reform agenda and the forthcoming IMF program review.