ISLAMABAD: The International Monetary Fund (IMF) has disbursed $1.2 billion to Pakistan in two separate tranches, providing a significant boost to the country’s external financing position.
According to a private channel report, the Fund released $200 million specifically under climate financing initiatives aimed at supporting Pakistan’s resilience and environmental reforms.
Sources confirmed that the remaining $1 billion, issued under the Extended Fund Facility (EFF), has been transferred directly into the State Bank of Pakistan’s account.
The International Monetary Fund (IMF) Executive Board met in Washington on December 8, 2025 and released $1.2 billion to Pakistan, recognising its efforts in macroeconomic reform.
That brings to $3.3 billion the amount disbursed by the Washington-based fund to Islamabad under two programmes aimed at providing financial support for economic reforms and mitigating the impacts of climate change.
IMF Deputy Managing Director Nigel Clarke said in a statement that “the implementation of reforms in Pakistan has helped to preserve macroeconomic stability despite recent shocks” to the country.
He referred to floods during the past summer monsoon season that had killed more than 1,000 people by September.
“The authorities’ commitment to meeting their primary balance target while providing the necessary emergency assistance in response to these severe floods is an important signal of their willingness to strengthen their credibility in fiscal policy,” Clarke said.
Read more: IMF Calls on Pakistan to Strengthen Economy Through Reforms
But he urged the government to accelerate reforms to improve economic data collection, privatisations and promote investment.
Mired in prolonged economic and political crisis, Pakistan is heavily dependent on external financing and narrowly avoided default in 2023, thanks to a $7 billion bailout from the IMF in 2024.
The South Asian nation is one of the largest debtors to the IMF after Argentina and Ukraine. It also secured a 10-year, $20 billion financing package from the World Bank in January.
Following is the text of the IMF statement:
The Executive Board of the International Monetary Fund (IMF) completed the second review of Pakistan’s economic reform program supported by the EFF and the first review of Pakistan’s program supported by the RSF. This decision allows for an immediate disbursement of around US$1 billion (SDR 760 million) under the EFF and around US$200 million (SDR 154 million) under the RSF, bringing total disbursements under the two arrangements to about $3.3 billion (SDR 2,434 billion).
Pakistan’s 37-month EFF was approved on September 25, 2024, and aims to build resilience and enable sustainable growth. Key priorities include (i) entrenching macroeconomic stability through consistent implementation of sound macro policies, including rebuilding international reserve buffers and broadening the tax base; (ii) advancing reforms to strengthen competition and raise productivity and competitiveness; and (iii) reforming SOEs and improving public service provision, developing human and physical capital, and restoring energy sector viability.
Pakistan’s policy efforts under the EFF have delivered significant progress in stabilizing the economy and rebuilding confidence amid a challenging global environment and recent severe floods. Fiscal performance has been strong, with a primary surplus of 1.3 percent of GDP achieved in FY25, in line with targets. Inflation has increased, reflecting the impact of the floods on food prices, but this is expected to be temporary. Gross reserves stood at $14.5 billion at end-FY25, up from $9.4 billion a year earlier, and are projected to continue to be rebuilt in FY26 and over the medium term.
The 28-month RSF was approved on May 9, 2025, and is supporting the authorities’ efforts to reduce vulnerabilities to natural disasters and to build economic and climate resilience. The authorities’ program: (i) prioritizes building resilience to natural disasters and strengthening public investment processes at all levels of government; (ii) making scarce water resource usage more efficient, including through better pricing; (iii) strengthening federal-provincial coordination of natural disaster response; (iv) improving the information architecture for, and disclosure of, climate-related risks by banks and corporates; and (v) supporting Pakistan’s efforts to meet its mitigation commitments and reduce related macro-critical risks.
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