Pakistan Secures IMF Staff Deal For $1.2bn Tranche

Pakistan and the International Monetary Fund have reached a staff-level agreement that could unlock about $1.2 billion in new financing after approval by the lender’s Executive Board. The agreement covers the fourth review of Pakistan’s $7 billion Extended Fund Facility and the third review of the $1.4 billion Resilience and Sustainability Facility.

The development was announced after discussions between Pakistani authorities and an IMF team that held talks from September 23 to October 7. If the board clears the agreement, Pakistan is expected to gain access to around $1 billion under the Extended Fund Facility and about $210 million under the climate-focused facility.

The latest deal would bring total disbursements under the two programmes to about $5.7 billion. For Pakistan, the funding is important because the country remains dependent on external financing to strengthen foreign exchange reserves, meet debt obligations and preserve market confidence during a period of regional and global uncertainty.

The IMF said Pakistan’s programme implementation had remained broadly on track despite a difficult external environment. It noted that authorities remained committed to macroeconomic stability, stronger public finances, inflation control, energy sector reforms, better social protection and measures to support private-sector-led growth.

The lender also pointed to signs of stabilisation in the economy. Real GDP growth reached 4 percent in the first three quarters of fiscal year 2026, while full-year growth was estimated at 3.6 percent after higher energy prices and supply disruptions slowed momentum. Headline inflation eased to about 10.3 percent in September after peaking in May.

Pakistan’s external position also showed improvement, with the current account broadly balanced in fiscal year 2026 and gross reserves rising to about $21.5 billion by the end of September. The IMF said sovereign rating upgrades and renewed international market access reflected stronger policy credibility, though it warned that risks remained high because of geopolitical tensions, volatile energy prices, tighter global financial conditions and possible trade disruptions.

The agreement also comes with clear policy expectations. The IMF called for continued implementation of strong fiscal policies, including the fiscal year 2027 budget, revenue administration measures, digital invoicing, risk-based audits and use of third-party data to protect revenue targets. It also urged reforms to make the tax system simpler, fairer and more supportive of growth.

The lender recommended phasing out the fuel support scheme because of its high cost and broad targeting. It also said future fuel support, if needed because of higher oil prices, should be limited, time-bound and targeted through established social assistance systems. The next key step is Executive Board approval, after which Pakistan would be able to draw the new tranche and continue with the agreed reform agenda.