The International Monetary Fund (IMF) has approved approximately $1.3 billion in fresh funding for Pakistan following the successful completion of two critical programme reviews, allowing an immediate disbursement of $1.1 billion under the Extended Fund Facility (EFF) and $220 million under the Resilience and Sustainability Facility (RSF). Total disbursements under both programmes now stand at approximately $4.8 billion.

What the IMF Approved

The IMF Executive Board completed the third review of Pakistan's Extended Fund Facility and the second review of its Resilience and Sustainability Facility on 9 May 2025. The EFF programme was originally approved in September 2024 and is designed to build economic resilience while supporting long-term growth through fiscal stability, tax expansion, and stronger public institutions.

The IMF noted that Pakistan's "strong implementation, despite the Middle East war, has maintained economic stability and improved financing and external conditions."

Key Economic Indicators

Pakistan's fiscal performance has remained strong, with a primary surplus of 1.6% of GDP projected for fiscal year 2026. Foreign reserves have improved markedly, rising to $16 billion at the end of December from $14.5 billion in June 2025. However, inflation has risen, driven by higher global commodity prices pushing up domestic energy costs.

IMF Deputy Managing Director Nigel Clarke said, "Pakistan's strong program implementation under the EFF arrangement has continued, which has supported macroeconomic stability and the rebuilding of fiscal and foreign exchange buffers." He added that "GDP growth accelerated, inflation remained contained, and the current account was broadly balanced in the first nine months of FY26."

Risks and Warnings

Clarke cautioned that significant risks remain, citing a "more challenging and highly uncertain external environment since the onset of the war in the Middle East." He stressed that Pakistan must maintain strong policies and continue pushing structural reforms to safeguard the gains made. This comes amid persistent global commodity swings and regional tensions that have repeatedly tested Pakistan's economic resilience.

Structural Reforms on the Agenda

The IMF has called for deeper reforms beyond fiscal discipline. These include the privatisation of state-owned enterprises, stronger anti-corruption measures, and energy pricing reforms that reflect actual costs while protecting vulnerable households. The State Bank of Pakistan has been advised to maintain a tight monetary policy stance to anchor inflation expectations. Clarke said, "The authorities' commitment to the FY26 and FY27 primary balance targets will help strengthen fiscal sustainability and policy credibility."

The climate-focused RSF programme supports disaster response, water management, and climate risk reporting — areas of acute concern given Pakistan's vulnerability to extreme weather events. The IMF programme remains central to restoring investor confidence and sustaining the country's economic recovery trajectory.