IMF Reaches Staff-Level Agreement With Pakistan; $1.2 Billion Support Likely Pending Board Approval

The International Monetary Fund has reached a staff-level accord with Pakistan, potentially unlocking nearly $1.2 billion in fresh assistance as authorities advance fiscal consolidation and economic reforms.

The agreement follows detailed consultations on the third review under the Extended Fund Facility and the second review under the Resilience and Sustainability Facility.

The Fund confirmed that the arrangement now awaits approval from its Executive Board.

Upon endorsement, Pakistan will access approximately $1.0 billion through the EFF and about $210 million under the RSF, raising cumulative disbursements to nearly $4.5 billion.

The IMF observed that programme execution remains broadly consistent with targets aimed at strengthening public finances, curbing inflation, and accelerating structural transformation.

Economic indicators signal a gradual improvement. Growth momentum has strengthened after recovery in FY25, while inflation and the current account deficit remain contained.

External buffers have also improved, reflecting enhanced macroeconomic stability. Nonetheless, risks endure.

The IMF cautioned that instability in West Asia may elevate energy costs and tighten global financial conditions, thereby affecting Pakistan’s outlook.

Authorities have pledged to sustain a prudent fiscal approach. They aim for a primary surplus of 1.6 per cent of GDP in FY26 and 2 per cent in FY27 to reduce public debt.

Revenue reforms remain central, with the Federal Board of Revenue intensifying audits and expanding digital oversight.

A Tax Policy Office is also drafting a medium-term reform roadmap.

The State Bank of Pakistan stands ready to tighten monetary policy if inflationary pressures rise, while exchange rate flexibility will absorb shocks.

Energy sector reforms continue, focusing on curbing circular debt, ensuring cost recovery, and advancing privatisation and efficiency.

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