IMF Reaches Staff-Level Agreement, Pakistan to get $1.21bn soon
WASHINGTON: The International Monetary Fund (IMF) has reached a staff-level agreement with Pakistan on the fourth review under the $7 billion Extended Fund Facility (EFF) and the third review under the Resilience and Sustainability Facility (RSF).
The agreement followed discussions between an IMF team, led by Iva Petrova, and Pakistani authorities in Karachi and Islamabad from September 23 to October 7, 2026.
The staff-level agreement is subject to approval by the IMF Executive Board. Upon approval, Pakistan will gain access to around $1 billion (SDR 760 million) under the EFF and approximately $210 million (SDR 154 million) under the RSF.
The IMF said the approval would bring total disbursements under the two arrangements to around $5.7 billion.
According to the IMF, Pakistan’s EFF programme implementation has remained broadly on track despite a challenging external environment. The Fund said strong economic policies helped the country preserve macroeconomic stability while navigating the impact of the Middle East conflict.
Pakistan Economy
The IMF estimated Pakistan’s real GDP growth at 4 percent in the first three quarters of FY26, while full-year growth was 3.6 percent, as higher energy prices and supply disruptions weakened economic momentum.
Headline inflation moderated to around 10.3 percent in September after peaking in May, while core inflation remained contained, the IMF said.
Pakistan’s current account remained broadly balanced in FY26, supported by strong remittances, while gross foreign exchange reserves increased to approximately $21.5 billion by the end of September.
The IMF noted that sovereign rating upgrades and renewed access to international capital markets indicated stronger policy credibility, but warned that significant risks remained due to geopolitical tensions, volatile energy prices, tighter global financial conditions and trade disruptions.
The Fund said Pakistan should maintain strong fiscal policies, with implementation of the FY27 budget anchored by an underlying primary surplus target of 2 percent of GDP.
It also called for continued tax administration reforms, including risk-based audits, digital invoicing and greater use of third-party data, along with a comprehensive medium-term tax reform strategy.
The IMF stressed the need to strengthen public financial management, reduce debt rollover risks and improve the efficiency and transparency of public investment, procurement and government cash management.
On social spending, the Fund welcomed the increase in health and education spending from 2.2 percent of GDP in FY24 to 2.5 percent in FY26, with the authorities targeting 2.8 percent in FY27.
The IMF also urged Pakistan to maintain an appropriately tight monetary policy stance to ensure inflation returns sustainably to the State Bank of Pakistan’s target range and called for continued exchange rate flexibility.
On the energy sector, the Fund said timely tariff adjustments and cost-reducing reforms remained essential to prevent renewed accumulation of circular debt. It highlighted improving distribution-sector efficiency, increasing private participation, strengthening electricity-market competition and reducing gas losses as key priorities.
The IMF said the Article IV consultation also focused on structural reforms, including strengthening competition, reducing regulatory and trade barriers, advancing privatization, improving state-owned enterprise governance and transparency, and strengthening governance and anti-corruption institutions.
Under the RSF, Pakistan is continuing reforms aimed at strengthening resilience to climate change, including climate-focused public investment planning, disaster-risk financing, irrigation water pricing, targeted electricity subsidies, energy-efficiency standards and transport decarbonization.
About The Author
