WASHINGTON: The International Monetary Fund Executive Board on Friday approved the latest review of Pakistan’s economic reform programme, clearing the way for the release of approximately $1.32 billion in fresh financing under the country’s ongoing bailout arrangements.
The approval allows Pakistan to receive around $1.1 billion under the Extended Fund Facility (EFF) and nearly $220 million through the Resilience and Sustainability Facility (RSF), taking total IMF disbursements to roughly $4.8 billion so far.
Finance Minister Muhammad Aurangzeb confirmed the development, calling it a reflection of Pakistan’s continued progress on “difficult but necessary” economic reforms.
The IMF Executive Board approved the review during a meeting held in Washington, where the Fund acknowledged Pakistan’s progress in implementing fiscal reforms, tax measures and energy pricing adjustments aimed at improving macroeconomic stability.
In its official statement, the IMF said Pakistan’s policy implementation under the programme had remained strong despite an increasingly uncertain global environment and geopolitical tensions linked to the Middle East conflict.
“Pakistan’s strong programme implementation under the EFF arrangement has continued, supporting macroeconomic stability and rebuilding fiscal and foreign exchange buffers,” the IMF stated.
The Fund, however, warned that external risks had increased due to the ongoing war in the Middle East, stressing the need for Pakistan to maintain strict economic discipline and continue structural reforms.
According to the IMF, Pakistan’s economy showed signs of improvement during the review period, with GDP growth accelerating, inflation remaining relatively contained and the current account broadly balanced during the first nine months of fiscal year 2025-26.
The Fund noted that inflationary pressure had increased mainly because of rising international commodity prices and adjustments in domestic energy tariffs aimed at restoring the financial viability of the energy sector.
Foreign exchange reserves also improved significantly, increasing to $16 billion by December 2025 compared to $14.5 billion in June 2025.
Following the board meeting, IMF Deputy Managing Director Nigel Clarke urged Pakistan to maintain tight macroeconomic policies while accelerating reforms to withstand future shocks and achieve sustainable growth.
He said gradual fiscal consolidation remained essential and should be supported by broader tax collection, improved compliance and stronger public financial management.
The IMF also emphasised the importance of expanding the tax base, particularly in previously under-taxed sectors such as retail and agriculture, while improving spending efficiency and protecting social welfare programmes.
On monetary policy, the IMF praised the State Bank of Pakistan for maintaining a tight policy stance to anchor inflation expectations and advised continued vigilance against inflationary risks.
The Fund further stressed that exchange-rate flexibility should remain Pakistan’s primary economic shock absorber as the country continues rebuilding foreign exchange reserves.
Energy sector reforms were highlighted as a central component of the IMF programme, with Pakistan committed to maintaining cost-reflective electricity, gas and fuel prices while providing targeted support to vulnerable consumers.
The IMF also called for continued reforms in governance, anti-corruption institutions and the restructuring and privatisation of state-owned enterprises to reduce fiscal burdens and improve economic efficiency.
Under the programme, Pakistan has committed to maintaining a primary budget surplus of around 2 percent of GDP and pursuing long-term structural reforms aimed at strengthening economic sustainability.
Officials said an IMF mission is scheduled to visit Islamabad on May 15 to discuss Pakistan’s upcoming federal budget and review progress on further reforms.
Pakistan is currently operating under a $7 billion, 37-month IMF programme designed to stabilise the economy through fiscal discipline, structural reforms and measures supporting long-term growth.
Analysts believe the latest IMF approval will provide short-term relief to financial markets while reinforcing investor confidence in Pakistan’s reform agenda and economic recovery efforts.
