IMF, Pakistan Reach Staff-Level Agreement for $1.2 Billion Tranche Under EFF
WASHINGTON: The International Monetary Fund (IMF) and Pakistan have reached a staff-level agreement for the release of a $1.2 billion tranche under the Extended Fund Facility (EFF), marking another critical step toward the country’s economic stabilization and reform agenda.
According to an official IMF statement, Pakistan has secured $1 billion under the ongoing 37-month loan program, with an additional $200 million allocated for climate resilience initiatives.
The global lender confirmed that Pakistan successfully met stringent economic targets, satisfying the IMF mission that visited the country from September 24 to October 8. Follow-up discussions continued after the mission’s departure, ultimately resulting in a positive outcome.
“Pakistan demonstrated a 1.6% primary surplus despite the devastating floods and maintained steady progress in implementing tax reforms,” the statement read. It added that a comprehensive action plan has been finalized to address potential tax shortfalls, while both federal and provincial governments will jointly allocate funds for flood recovery efforts.
The IMF praised Pakistan’s efforts to increase social spending, including expanding the Benazir Income Support Programme (BISP) to reduce poverty. It also commended timely measures at both federal and provincial levels to strengthen education and healthcare sectors.
According to the IMF, Pakistan’s fiscal deficit is now at its lowest level in 14 years, reflecting the government’s effective reform strategy and improved tax collection policies. The establishment of a Tax Policy Office was cited as a key milestone toward reducing reliance on temporary revenue measures.
The State Bank of Pakistan (SBP) reaffirmed its commitment to maintaining a tight monetary policy to contain inflation within the 5–7% range, while efforts are underway to stabilize foreign exchange reserves and enhance economic resilience.
In the energy sector, Pakistan pledged to reduce circular debt, ensure timely cost recovery, and accelerate privatization of power distribution companies to improve operational efficiency.
The IMF also urged Pakistan to minimize government intervention in agriculture, enhance food security, and prepare for global market competitiveness. Under the Resilience and Sustainability (RSS) program, Pakistan must implement reforms related to emission reduction, water management, and energy efficiency to meet its climate goals.
The IMF mission concluded by expressing sympathy over the recent flood losses and gratitude for Pakistan’s hospitality during the negotiations.
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