IMF clears $1.3 billion for Pakistan reforms

Washington, May 9 The International Monetary Fund approved about $1.3 billion in fresh funding for Pakistan after completing key programme reviews.

The IMF Executive Board completed the third review of Pakistan’s Extended Fund Facility and the second review of its Resilience and Sustainability Facility. This allows an immediate disbursement of about $1.1 billion and $220 million.

Total disbursements under the two programmes now stand at about $4.8 billion.

The IMF said Pakistan’s “strong implementation, despite the Middle East war, has maintained economic stability and improved financing and external conditions”.

The programme, approved in September 2024, aims to build resilience and support long-term growth. Reforms focus on fiscal stability, tax expansion, and stronger public institutions.

Pakistan has made progress. Fiscal performance remains strong. A primary surplus of 1.6 per cent of GDP is expected in fiscal year 2026.

Foreign reserves have improved. They rose to $16 billion at the end of December from $14.5 billion in June 2025.

Inflation has risen. Higher global commodity prices have pushed 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 said “GDP growth accelerated, inflation remained contained, and the current account was broadly balanced in the first nine months of FY26”.

Clarke warned that risks remain. He cited a “more challenging and highly uncertain external environment since the onset of the war in the Middle East”.

He said Pakistan must keep strong policies and push reforms.

The IMF stressed fiscal discipline. Clarke said, “The authorities’ commitment to the FY26 and FY27 primary balance targets will help strengthen fiscal sustainability and policy credibility.”

Flagging Pakistan’s monetary policy, the IMF said the central bank should keep a tight stance to anchor inflation expectations.

Energy reforms are key. The IMF said prices must reflect costs while protecting vulnerable households.

It also called for deeper structural reforms. These include privatisation of state-owned firms and stronger anti-corruption efforts.

The climate-focused RSF programme supports disaster response, water management, and climate risk reporting.

Pakistan’s economy has faced repeated external shocks. These include global commodity swings and regional tensions.

The IMF programme remains central to stabilising the economy. It is also key to restoring investor confidence and rebuilding reserves.

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