ISLAMABAD: Pakistan has received initial approval from the International Monetary Fund (IMF) to unlock $1.2 billion in loans under two financing programs aimed at stabilizing the economy and supporting climate resilience initiatives.
According to the IMF statement, the country will receive $1 billion under the Extended Fund Facility (EFF) and $200 million through the Resilience and Sustainability Facility (RSF), which is designed to support Pakistan’s climate reform agenda. The disbursement remains subject to the IMF Executive Board’s final approval.
Vital Support Amid Climate-Driven Economic Challenges
The IMF’s preliminary green light comes at a critical time for Pakistan, which has been grappling with the economic aftermath of devastating monsoon floods. The climate disaster killed more than 1,000 people, affected 7 million citizens, and destroyed large swathes of agricultural land.
The IMF’s review mission revised Pakistan’s growth outlook for the current fiscal year ending June to 3.25%–3.5%, down from the previous 3.6%, citing the impact of the floods on productivity and infrastructure.
“The authorities are committed to sustaining fiscal efforts to strengthen public finances while providing support to the victims of the recent floods,” the IMF statement noted.
The Washington-based lender added that while the floods may cause a temporary spike in inflation, the central bank stands ready to act if price pressures increase or confidence in monetary stability is shaken.
Ongoing Engagement with IMF Mission
This initial agreement follows intensive talks between Pakistan and the IMF, after a mission led by Iva Petrova visited Karachi and Islamabad from September 24 to October 8 to assess the loan programs.
The IMF’s support is expected to bolster Pakistan’s foreign exchange reserves, stabilize its currency, and strengthen fiscal buffers as the country continues its path toward economic recovery and climate resilience.
Next Steps
Once approved by the IMF Executive Board, the loan will provide Pakistan with much-needed breathing space to address flood recovery costs, meet fiscal targets, and implement climate adaptation measures. Officials say the funding will also play a crucial role in reassuring international creditors and investors.
