The International Monetary Fund (IMF) has reached a staff-level agreement (SLA) with Pakistan on the fourth review of the $7 billion Extended Fund Facility (EFF) and the third review of the $1.4 billion Resilience and Sustainability Facility (RSF). The deal makes the country eligible for about $1.2 billion in disbursements within four to five weeks.
The agreement is subject to approval by the IMF Executive Board. Once approved, Pakistan will receive about $1 billion (SDR 760 million) under the EFF and about $210 million (SDR 154 million) under the RSF. Total disbursements under the two arrangements will rise to about $5.7 billion.
The IMF announced the SLA in a statement from Washington, saying it also concluded the 2026 Article IV consultation. A team led by Iva Petrova held talks in Pakistan from September 23 to October 7.
The fund said programme implementation under the EFF has remained broadly on track despite a challenging external environment. It said the authorities have navigated the impact of the Middle East conflict, and policies have preserved macroeconomic stability.
Real GDP growth reached 4 percent in the first three quarters of FY26, while full-year growth is estimated at 3.6 percent. Headline inflation eased to about 10.3 percent in September after peaking in May. The current account was broadly balanced in FY26, supported by strong remittances, and gross reserves rose to about $21.5 billion by end-September. The IMF said risks remain high from geopolitical tensions, volatile energy prices, tighter global financial conditions and trade disruptions.
On fiscal policy, the IMF said full implementation of the FY27 budget, anchored by an underlying primary surplus of 2 percent of GDP, is critical to putting public debt on a downward path. It said revenue administration reforms, including risk-based audits, digital invoicing and the use of third-party data, will help protect revenue targets. It also called for a medium-term tax reform strategy to make the system fairer and simpler.
The fund said health and education spending rose from 2.2 percent of GDP in FY24 to 2.5 percent in FY26, and the authorities are committed to raising it to 2.8 percent in FY27. It added that a planned increase in targeted cash-transfer benefits will strengthen protection for vulnerable households.
The IMF called for the fuel support scheme to be phased out promptly because of its high cost and broad targeting. Any future fuel support, it said, should be limited, time-bound, targeted through established social assistance programmes, and kept within the FY27 budget.
It urged the State Bank of Pakistan to maintain an “appropriately tight” policy stance to bring inflation back within its target range. It said exchange rate flexibility should continue to act as a shock absorber, alongside reserve accumulation and gradual liberalisation of the foreign exchange regime.
In the energy sector, the fund called for timely tariff adjustments and cost-reducing reforms to prevent renewed circular debt. Priorities include greater private participation in distribution, deeper electricity market competition, gas sector cost recovery and lower gas losses.
The Article IV consultation focused on structural reforms, including stronger competition, lower regulatory and trade barriers, privatisation, better governance of state-owned enterprises and stronger anti-corruption institutions. Under the RSF, the IMF said the authorities are advancing climate reforms, including irrigation water pricing, better-targeted electricity subsidies, energy-efficiency standards and transport decarbonisation.
The Ministry of Finance said on social media platform X that Finance Minister Muhammad Aurangzeb held a wrap-up session with Petrova at the end of the review.
Pakistan and the IMF agreed the EFF package in July 2024. An SLA on the first review followed in March 2025, and in May 2025 the IMF Board approved a $1 billion disbursement under the EFF and the RSF loan, bringing total releases to about $2.1 billion.
In October 2025, the two sides reached an SLA on the second review, securing $1 billion under the EFF and $200 million under the RSF. The Board approved it in December.
Talks on the third review in March 2026 ended without an agreement. In May, the Board approved about $1.1 billion under the EFF and $220 million under the RSF, taking total disbursements to roughly $4.8 billion. A Petrova-led mission last visited Pakistan from May 13 to May 20 for talks on economic developments, reforms and the FY27 budget strategy.
