IMF approves $1.2 billion tranche for Pakistan

The International Monetary Fund (IMF) announced on Saturday that it has reached a staff-level agreement with Pakistan, unlocking roughly $1.2 billion in funding. The tranche follows the successful completion of Pakistan’s third review under the Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF). Subject to IMF board approval, Pakistan is set to receive about $1 billion under the EFF and $210 million under the RSF, bringing total disbursements under both programs to approximately $4.5 billion.

According to Dawn, IMF officials noted that Pakistan’s economic policies, including its fuel pricing measures, remain broadly aligned with objectives to stabilize finances, control inflation, strengthen social protection, and advance structural reforms. The agreement comes amid global uncertainties, including the Middle East conflict, which poses potential risks for energy prices, inflation, and overall growth.

Focus on Fiscal, Monetary, and Social Reforms

The IMF highlighted Pakistan’s ongoing efforts to maintain fiscal discipline, reduce public debt, and broaden the tax base while safeguarding spending on health, education, and social welfare programs. Key reforms include expanding digital invoicing, strengthening taxpayer audits, and enhancing federal-provincial fiscal coordination.

Authorities also remain committed to protecting vulnerable populations from volatile fuel and food prices, including measures to improve the Benazir Income Support Program (BISP) through inflation-adjusted cash transfers and broader coverage. Meanwhile, the State Bank of Pakistan is tasked with keeping inflation within target ranges and managing exchange rate flexibility to absorb external shocks.

Energy, Structural, and Climate Priorities

The IMF emphasized Pakistan’s commitment to achieving energy sector viability, avoiding costly subsidies, and improving efficiency through privatization, transmission upgrades, and a shift toward renewable energy. Broader structural reforms aim to reduce state intervention, boost productivity, enhance governance, and promote private sector growth.

Under the RSF, climate-related reforms are also advancing, including green mobility initiatives, better disaster risk management, and water system resilience. The IMF praised the authorities for ongoing efforts to align policy priorities with sustainable development goals, stating that the collaboration with Pakistan’s government, private sector, and development partners was “fruitful and constructive.”