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The International Monetary Fund (IMF) and Pakistan have reached a staff-level agreement under the second review of the Extended Fund Facility (EFF) and the first review of the Resilience and Sustainability Facility (RSF). The agreement, announced on October 14, 2025, is subject to approval by the IMF Executive Board.
Once approved, Pakistan will receive around $1.2 billion; $1 billion under the EFF and $200 million under the RSF. This will bring total disbursements under both programs to about $3.3 billion.
Economic Progress Despite Challenges
The IMF praised Pakistan’s performance under the program. The country recorded its first current account surplus in 14 years, exceeded its fiscal primary balance targets, contained inflation, and strengthened external buffers. Sovereign spreads also narrowed, signaling improved investor confidence.
However, recent floods affected nearly 7 million people and caused severe damage to homes, infrastructure, and farmland. As a result, the FY26 GDP growth forecast has been revised down to 3.25–3.5%. The disaster also highlighted Pakistan’s high vulnerability to climate change.
IMF Reforms to Strengthen Stability and Resilience
Under the agreement, Pakistan has committed to a 1.6% of GDP primary surplus for FY26. Authorities plan to boost revenue collection, enhance social protection through the Benazir Income Support Program, and scale up spending on health and education.
The State Bank of Pakistan will keep a tight, data-driven monetary policy to maintain inflation within 5–7%. Reforms will target energy sector viability through timely tariff adjustments and governance improvements.
The RSF program will focus on climate resilience, including water management, disaster financing, and green mobility. These steps aim to build a stronger and more sustainable economic foundation.
The IMF mission, led by Iva Petrova, held discussions in Karachi, Islamabad, and Washington between September 24 and October 8, 2025.
The IMF team expressed their satisfaction by releasing an official statement. They said:
The IMF team wants to express its sympathy to those affected by the recent floods, and is grateful to the Pakistani authorities, private sector, and development partners for many fruitful discussions and their hospitality throughout this mission.
