Pakistan Reaches Staff-Level Agreement With IMF for $1.2 Billion Loan Tranche

Pakistan has reached a staff-level agreement with the International Monetary Fund (IMF) on the third review of its Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF), bringing the country closer to receiving fresh financial support.

The agreement, announced Friday, remains subject to approval by the IMF Executive Board. Once cleared, Pakistan will gain access to approximately $1 billion under the EFF program and about $210 million under the RSF, raising total disbursements under both arrangements to roughly $4.5 billion.

The IMF said Pakistan’s reform program remains broadly on track, with progress recorded in fiscal consolidation, inflation management, energy-sector restructuring, and structural economic reforms aimed at stabilizing the economy and restoring investor confidence.

According to the Fund, economic activity has strengthened following recovery in fiscal year 2025, while inflation and the current account balance have remained contained. External buffers have also improved, although global uncertainties—particularly geopolitical tensions in the Middle East—pose risks through volatile energy prices and tighter financial conditions.

The IMF noted that Pakistani authorities remain committed to maintaining prudent macroeconomic policies to safeguard recent stabilization gains while expanding social protection measures to shield vulnerable households from rising living costs.

Under the program, Pakistan has pledged to maintain fiscal discipline, targeting a primary budget surplus of 1.6 percent of GDP in FY2026 and moving toward a 2 percent surplus in FY2027. Efforts are underway to broaden the tax base, strengthen expenditure controls, and improve coordination between federal and provincial governments.