IMF Executive Board approves $1.2bn tranche for Pakistan as total disbursements hit $3.3b
The IMF Executive Board approves $1.2bn tranche for Pakistan after completing key reviews of the country’s ongoing loan programmes under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF). With this approval, Pakistan’s total disbursements under both arrangements have now reached $3.3 billion, marking a significant development in the country’s ongoing economic recovery efforts. The global lender confirmed the decision late Tuesday, noting that the approval includes the release of $1 billion under the EFF and an additional $200 million under the RSF.
In its official statement, the International Monetary Fund said that the Executive Board had completed the second review of Pakistan’s reform program supported by the EFF, along with the first review under the RSF. The IMF highlighted that the approval enables the immediate disbursement of around $1 billion (SDR 760 million) under the EFF and $200 million (SDR 154 million) under the RSF, bringing the cumulative disbursements under both programmes to approximately $3.3 billion (SDR 2,434 million). The lender noted that Pakistan’s performance under the EFF has shown measurable progress despite a challenging global environment and the economic impact of recent severe floods.
The IMF acknowledged Pakistan’s policy consistency over the past year, stating that fiscal performance has remained strong with a primary surplus of 1.3% of GDP recorded in FY25, achieving the targets set in the program. It added that while inflation had increased due to food supply disruptions caused by the floods, the surge was expected to be temporary. The lender also reported a significant improvement in Pakistan’s foreign exchange reserves, which stood at $14.5 billion at the end of FY25, compared to $9.4 billion a year earlier. The IMF expects reserves to continue rising in FY26 and in the medium term, provided the government maintains its policy discipline.
The approval follows the staff-level agreement reached in October after extensive discussions between the IMF delegation, led by Iva Petrova, and Pakistani authorities in Karachi, Islamabad and later in Washington, DC. These meetings included detailed assessments of Pakistan’s fiscal framework, monetary policy measures, energy sector reforms and climate-resilience agenda. Pakistan had already received two installments under the EFF in earlier reviews, and the new tranche under the RSF marks another milestone in the government’s efforts to address long-term climate vulnerabilities.
The IMF highlighted several priority areas for Pakistan moving forward, including the need to sustain fiscal discipline while ensuring support for flood-affected communities, keeping inflation within the State Bank’s target range, restoring the viability of the energy sector and advancing broader structural and governance reforms. The lender noted meaningful progress on the climate agenda backed by the RSF, stressing that the recent floods underscored the urgent need for comprehensive actions to address climate-related risks.
Ahead of the Board meeting, the IMF released its Governance and Corruption Diagnostic (GCD) report, which presented a detailed review of Pakistan’s governance challenges. The report warned that persistent corruption and institutional weaknesses continue to undermine economic development even as the country stabilises under the EFF. It noted that corruption remains a major obstacle, affecting public service delivery, revenue collection and the overall trust in legal and administrative systems. The report stated that Pakistanis often face repeated payments to obtain basic services, and funds lost to corrupt practices could otherwise be directed toward economic growth and development projects.
The GCD report further noted that political and economic elites have historically influenced policies for their own benefit, obstructing broader economic reforms and limiting the country’s development potential. The IMF encouraged Pakistani authorities to address these governance gaps through stronger oversight, accountability frameworks and transparency mechanisms.
The latest IMF disbursement is expected to bolster Pakistan’s external financing position and provide much-needed support to the country’s foreign exchange reserves at a time when global economic pressures and domestic challenges continue to weigh heavily on financial stability. Analysts suggest that the inflow will provide temporary relief to the currency and financial markets, though long-term stability will hinge on consistent policy implementation and reform momentum.
With the release of the latest tranche, Pakistan’s economic team remains focused on meeting the remaining structural benchmarks and preparing for future IMF reviews. Officials believe that continued cooperation with the IMF will help strengthen fiscal responsibility, improve governance and support the country’s broader economic resilience in the face of global uncertainty.
