IMF, Pakistan reach staff-level agreement on $1.2bn disbursement

Pakistan and the International Monetary Fund (IMF) have reached a staff-level agreement on the fourth review of the Extended Fund Facility (EFF) and the third review of the Resilience and Sustainability Facility (RSF). This agreement paves the way for Pakistan to access approximately $1.2 billion in funds, subject to IMF Executive Board approval.

• Staff-level agreement reached on the fourth review of the 37-month EFF.
• Agreement also covers the third review of the 28-month Resilience and Sustainability Facility (RSF).
• Pakistan to access about $1.2 billion upon IMF Executive Board approval.
• Discussions also included the 2026 Article IV consultation.

IMF Program Implementation and Economic Stability

The IMF noted that program implementation under the EFF has remained broadly on track despite a challenging external environment. The Pakistani government has reiterated its commitment to maintaining macroeconomic stability and strengthening public finances.

• Program implementation under EFF is broadly on track.
• Government committed to preserving macroeconomic stability.
• Focus on strengthening public finances and controlling inflation.
• Enhancing energy sector viability and social protection are key goals.
• Accelerating reforms for sustainable, private sector-led growth is a priority.

Climate Reforms and Resilience

Pakistan is advancing its climate reform agenda under the RSF. The objective is to bolster the nation’s resilience and reduce vulnerabilities to climate-related risks, aligning with global sustainability efforts.

• Pakistan advancing climate reform agenda under RSF.
• Aiming to strengthen resilience to climate-related risks.
• Reducing vulnerabilities to climate change impacts.

Economic Performance and Outlook

Despite geopolitical tensions and volatile energy prices, Pakistan’s economy has shown resilience. Real GDP growth reached 4 percent in the first three quarters of FY26, with an estimated 3.6 percent for the full fiscal year.

• Real GDP growth reached 4 percent in the first three quarters of FY26.
• FY26 growth estimated at 3.6 percent despite headwinds.
• Headline inflation moderated to about 10.3 percent in September.
• Core inflation remained contained.
• Current account was broadly balanced in FY26, supported by remittances.
• Gross reserves rose to about US$21.5 billion by end-September.
• Sovereign rating upgrades and renewed market access indicate stronger policy credibility.

Risks and Future Reforms

While the economic outlook is cautiously optimistic, significant risks persist. These include ongoing geopolitical tensions, fluctuating energy prices, tighter global financial conditions, and potential trade disruptions.

Structural Transformation Agenda

The Article IV consultation focused on reforms aimed at transforming the economy. The goal is to shift towards higher value-added activities and reduce gaps compared to peer countries.

• Focus on reforms for structural economic transformation.
• Moving towards higher value-added economic activities.
• Strengthening competition within the economy.
• Reducing regulatory and trade barriers.
• Advancing privatization initiatives.
• Enhancing the business environment.

Disbursement Details

Upon approval by the IMF Executive Board, Pakistan is set to receive approximately US$1.0 billion (SDR 760 million) under the EFF. An additional US$210 million (SDR 154 million) will be disbursed under the RSF.

These disbursements will bring the total under the two arrangements to about US$5.7 billion.

1. IMF Executive Board approval is the final step.
2. Disbursement under EFF: approximately US$1.0 billion (SDR 760 million).
3. Disbursement under RSF: approximately US$210 million (SDR 154 million).
4. Total disbursements under both facilities to reach about US$5.7 billion.

Conclusion

The staff-level agreement between Pakistan and the IMF marks a significant step towards economic stabilization and reform. Access to these funds will provide crucial support for Pakistan’s economic programs, including efforts to enhance climate resilience.

The government’s commitment to macroeconomic stability and structural reforms is central to navigating the current economic landscape and fostering sustainable growth.

Frequently Asked Questions

What is the total amount Pakistan is set to receive?

Pakistan is expected to access about $1.2 billion, with further details on EFF and RSF disbursements.

What facilities are covered by this agreement?

The agreement covers the fourth review of the Extended Fund Facility (EFF) and the third review of the Resilience and Sustainability Facility (RSF).

When will the funds be disbursed?

Disbursement is contingent upon approval by the IMF Executive Board.

What is the estimated GDP growth for FY26?

FY26 growth is estimated at 3.6 percent, following 4 percent in the first three quarters.

What are the main risks highlighted by the IMF?

Key risks include geopolitical tensions, volatile energy prices, tighter global financial conditions, and trade disruptions.