Highlights
- Pakistan to receive £750 m under Extended Fund Facility and £150 m under climate resilience programme.
- IMF praises Pakistan's strong programme implementation and macroeconomic stability-.
- Country's gross reserves increase to £10.8 bn from £7.05 bn a year earlier.
The International Monetary Fund (IMF) has approved a fresh disbursement of approximately £900 m ($1.2 bn) to Pakistan, acknowledging the country's efforts to maintain economic stability despite facing devastating floods.
The IMF Executive Board granted approval under a dual-track bailout arrangement during a meeting in Washington on Monday. Pakistan will receive £750 m ($1 bn) under the 37-month Extended Fund Facility (EFF) and £150 m ($200 m) under the climate-focused Resilience Sustainability Facility (RSF).
Cash-strapped Pakistan is currently participating in its 24th IMF programme, agreed last year to provide $7 bn over 39 months. With this latest tranche, total disbursements under the EFF and RSF now stand at approximately £2.4 bn ($3.3 bn).
Reforms and stability
The board's statement highlighted that "Pakistan's strong programme implementation, despite the recent devastating floods, has maintained stability and improved financing and external conditions."
According to the IMF, Pakistan achieved a primary surplus of 1.3 per cent of GDP in FY25, meeting programme targets.
The country's gross reserves have increased significantly to £10.8 bn ($14.5 bn) at the end of FY25, up from £7.05 bn ($9.4 bn) a year earlier, and are projected to continue rebuilding.
The board noted that inflation has risen due to flood impacts on food prices but expects this to be temporary.
Pakistan's policy priorities remain focused on maintaining macroeconomic stability, strengthening public finances, reforming state-owned enterprises and improving the social safety net.
IMF deputy managing director Nigel Clarke emphasised the need for continued reforms. "In the face of an uncertain global environment, Pakistan needs to maintain prudent policies to further entrench macroeconomic stability, while accelerating reforms necessary to achieve stronger, private-sector-led, and sustainable medium-term growth," he said.
Clarke stressed that energy sector reforms are "critical to safeguarding its viability and improving Pakistan's competitiveness." He noted that timely power tariff adjustments have helped reduce circular debt.
Officials in Islamabad welcomed the approval as confidence in Pakistan's reform efforts, while acknowledging that the real test lies in converting these commitments into tangible economic recovery
