Pakistan Secures IMF Deal, $1.2 Billion Funding Near

ISLAMABAD: (Web Desk) – The International Monetary Fund and the Government of Pakistan have reached a staff-level agreement on Pakistan’s ongoing loan programme, marking an important step toward unlocking around $1.2 billion in fresh funding. However, the agreement still requires approval from the IMF’s Executive Board before the funds can be released.

According to the IMF, once approved, Pakistan will receive approximately $1 billion under the Extended Fund Facility and an additional $210 million through the Resilience and Sustainability Facility. This would bring total disbursements under the current programme to about $4.5 billion out of the overall $7 billion package.

The Washington-based lender has advised Pakistan to maintain a tight and data-driven monetary policy to keep inflation expectations under control and to strengthen external financial buffers. The State Bank of Pakistan recently kept its policy rate steady at 10.5%, pausing earlier rate cuts amid concerns over rising global energy prices and regional tensions that could fuel inflation.

The agreement follows successful discussions during the third review of the Extended Fund Facility and the second review of the Resilience and Sustainability Facility. IMF officials noted that Pakistan’s economic recovery, which began in FY25, has continued into the current fiscal year, with improved economic activity, controlled inflation, and a stable current account balance.

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Despite these gains, risks remain. The IMF highlighted that instability in the Middle East and fluctuating global energy prices could increase inflationary pressures and affect economic growth and external balances.

Pakistani authorities have reaffirmed their commitment to maintaining fiscal discipline, reducing public debt, and implementing structural reforms. Efforts are underway to expand the tax base, improve governance, and strengthen public financial management while increasing spending on health, education, and social protection programmes.

The government is also focusing on protecting vulnerable populations through initiatives like the Benazir Income Support Programme, aiming to enhance cash transfers, widen coverage, and improve delivery systems in response to rising living costs.

Additionally, reforms in the energy sector remain a priority to tackle circular debt and ensure long-term sustainability. Authorities plan to improve efficiency, move toward a competitive electricity market, and encourage renewable energy adoption while avoiding costly subsidies.