IMF to review Pakistan’s $7bn bailout and climate loan next week

ISLAMABAD: The Executive Board of the International Monetary Fund (IMF) is scheduled to meet on Friday, May 9, to review Pakistan’s economic progress under its ongoing $7 billion bailout package and to consider a new $1.3 billion loan aimed at supporting climate resilience efforts, according to the IMF’s website.

The meeting follows a staff-level agreement reached last month between the IMF and Pakistan. This agreement covers the first review of the 37-month Extended Fund Facility (EFF) and outlines terms for a fresh $1.3 billion loan under the Resilience and Sustainability Facility (RSF), a programme designed to help countries tackle climate vulnerabilities.

If approved by the IMF board, the new loan will be disbursed over a 28-month period. It will also unlock a further $1 billion tranche under the ongoing EFF, taking total disbursements under that programme to $2 billion.

The progress comes after an IMF mission, led by Nathan Porter, visited Karachi and Islamabad between February 24 and March 14 this year. The mission also held follow-up discussions virtually to finalise the agreements.

In a statement, Porter said climate risks remain a major concern for Pakistan, highlighting the need for long-term investments in adaptation and resilience.

Pakistan initially secured the $7 billion Extended Fund Facility in July 2024, with formal approval granted by the IMF board in late September. The programme serves as a key framework for economic reforms and has been critical in stabilising the country’s external finances, according to economists.

The potential release of new funds is expected to provide much-needed support to Pakistan’s foreign exchange reserves, which have been under pressure in recent weeks.

The State Bank of Pakistan reported a $367 million decline in reserves during the week ending April 18, bringing its total holdings to $10.21 billion. Overall, the country’s liquid foreign reserves stood at $15.44 billion, including $5.23 billion held by commercial banks.

The upcoming board meeting will be closely watched, as the outcome could significantly shape Pakistan’s short-term economic outlook and its ability to manage external shocks, particularly those linked to climate-related challenges.

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