Pakistan has secured a staff-level agreement with the International Monetary Fund (IMF), paving the way for the disbursement of approximately $1.2 billion under its ongoing Extended Fund Facility (EFF). This agreement, which still awaits formal approval from the IMF Executive Board, is expected to inject much-needed stability into Pakistan’s struggling economy.
The deal comprises $1 billion under the EFF and an additional $200 million through the Resilience and Sustainability Facility (RSF), aimed at supporting Pakistan’s climate adaptation and resilience projects. It follows weeks of intense negotiations in Washington between Pakistani finance officials and IMF representatives.
Finance Minister Muhammad Aurangzeb hailed the agreement as “a vote of confidence in Pakistan’s economic reform trajectory.” Speaking at a press briefing, he said the new tranche would help boost foreign exchange reserves, strengthen the rupee, and send a positive signal to international investors and credit rating agencies.
Pakistan’s foreign reserves currently stand at just over $9 billion — enough to cover around two months of imports. The country is also grappling with high inflation, energy price shocks, and slow industrial output. The IMF has emphasized fiscal discipline, energy sector reforms, and revenue mobilization as key conditions for future disbursements.
Under the agreement, Islamabad has committed to broadening the tax base, phasing out untargeted subsidies, and improving state-owned enterprise governance. It has also pledged to continue targeted social protection programs, especially through the Benazir Income Support Programme, to protect vulnerable segments of the population from the impact of austerity measures.
Analysts note that while the IMF program provides short-term relief, Pakistan’s structural challenges remain daunting. “This injection will buy some breathing space, but it won’t solve underlying issues like a narrow tax net, circular debt, or low productivity,” said a senior economist based in Karachi.
The IMF deal is expected to unlock additional funding from multilateral and bilateral partners, including development banks and friendly countries. This could strengthen Pakistan’s external financing position ahead of major debt repayments due early next year.
Global markets reacted positively to the development, with the rupee gaining modestly against the dollar and the Pakistan Stock Exchange showing signs of optimism. Business groups have urged the government to ensure that the economic reforms agreed with the IMF are implemented consistently, without political interference.
This is Pakistan’s 23rd program with the IMF since 1958 — a testament, many say, to the country’s recurring balance-of-payments crises. But officials insist this time must be different, with greater focus on sustainable reforms rather than short-term fixes.
