IMF Approves USD 1.2 Billion Disbursement to Pakistan Following Staff-Level Agreement

USD 1.2 Billion Disbursement

Pakistan: The International Monetary Fund (IMF) approves USD 1.2 billion disbursement to Pakistan following a staff-level agreement reached after several days of talks in Islamabad. The IMF confirmed that Pakistan’s economic program is contributing to macroeconomic stability and restoring market confidence. In July 2024, the IMF had approved a USD 7 billion bailout package for Pakistan under the Extended Fund Facility (EFF) to help the country avoid default amid a weakening economy. The latest agreement covers the second review of the 2024 EFF program and the first review of the 2025 Resilience and Sustainability Facility (RSF) climate loan. Under this arrangement, USD 1 billion will be disbursed through the EFF and USD 200 million through the RSF, both subject to approval by the IMF Executive Board.

The IMF stated that Pakistan’s economic recovery remains “on track,” with the FY25 current account surplus the first in 14 years, a fiscal primary balance exceeding program targets, contained inflation, and strengthened external buffers leading to improved financial conditions and narrower sovereign spreads. However, recent floods have negatively affected the agriculture sector, revising the projected FY26 GDP growth to 3.25–3.5%. The IMF’s decision follows opposition from India, which raised concerns that the funds could be misused, but the Fund confirmed that Pakistan had met all 11 required conditions. These included passing a federal budget for FY25–26 aligned with IMF targets, implementing four units under Agricultural Income Tax laws, and publishing a governance action plan based on the IMF Governance Diagnostic Assessment. The release of this USD 1.2 billion package highlights Pakistan’s continued efforts to stabilize its economy while meeting structural and fiscal reform requirements.

Source: NZA