The International Monetary Fund (IMF) and Pakistan have finalised a staff-level agreement (SLA) under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF), unlocking $1.2 billion in new financing once approved by the IMF Executive Board.
The IMF confirmed that Pakistan will access $1 billion through the EFF and $200 million via the RSF, raising total disbursements under both programs to $3.3 billion. The agreement follows intensive discussions held between September 24 and October 8, 2025, in Karachi, Islamabad, and Washington, led by IMF mission chief Iva Petrova.
According to the Fund, Pakistan’s recovery remains on track, with the FY25 current account posting a surplus for the first time in 14 years, inflation easing, and external buffers strengthening. The IMF praised Islamabad’s efforts to maintain macroeconomic stability through fiscal discipline and sustained reform momentum.
However, recent floods have slowed agricultural growth and lowered the GDP outlook for FY26 to around 3.25–3.5%, underscoring Pakistan’s climate vulnerability. The IMF emphasised that building climate resilience remains vital to protecting long-term growth and economic stability.
Finance authorities reaffirmed their commitment to the reform program, pledging to sustain a primary budget surplus of 1.6% of GDP through improved tax policy, compliance, and prudent spending. Social protection will remain central, with expanded coverage under the Benazir Income Support Programme (BISP) and greater health and education investment.
Structural reforms are also progressing in key sectors, from privatising inefficient state-owned enterprises to cutting circular debt through tariff adjustments and improving governance in the energy sector.
The State Bank of Pakistan will continue its prudent monetary stance to keep inflation within the 5–7% range while strengthening the foreign exchange market to manage external shocks.
Under the RSF, the IMF will support Pakistan’s climate initiatives, including green transport, improved water management, and disaster risk financing mechanisms.
The IMF lauded Pakistan’s commitment to reforms and expressed sympathy for communities affected by the floods, calling the agreement a step forward in stabilising the economy and building resilience.
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