Finance – IMF Clears New Funding Package to Support Pakistan’s Economic Recovery
Finance – Pakistan has secured fresh financial support from the International Monetary Fund after the lender approved new funding tied to ongoing economic reform programmes.
The International Monetary Fund has approved nearly $1.3 billion in additional financing for Pakistan following the successful completion of major programme assessments. The decision came after the IMF Executive Board reviewed Pakistan’s performance under its Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF).
Fresh Disbursement Strengthens Foreign Exchange Position
With the latest approval, Pakistan will immediately receive around $1.1 billion through the EFF programme, along with another $220 million under the climate-focused RSF arrangement. The combined support raises total disbursements under both programmes to nearly $4.8 billion.
According to the IMF, Pakistan has continued to implement economic reforms effectively despite growing uncertainty caused by conflict in the Middle East and pressure on global markets. The lender noted that these efforts have helped maintain macroeconomic stability and improve the country’s financing conditions.
Economic Reforms Continue Under IMF Programme
The IMF-backed programme, launched in September 2024, was designed to support Pakistan’s long-term economic recovery while strengthening resilience against external shocks. The reform agenda includes steps to improve fiscal discipline, widen the tax base, and strengthen governance within public institutions.
Pakistan’s fiscal performance has shown improvement in recent months. The IMF expects the country to achieve a primary budget surplus of 1.6 percent of GDP during the 2026 fiscal year. Foreign exchange reserves have also improved, increasing from $14.5 billion in June 2025 to approximately $16 billion by the end of December.
Inflation Pressures Remain a Key Challenge
Despite progress in several economic indicators, inflationary pressure continues to affect the economy. Rising global commodity prices have increased domestic energy costs, adding pressure on households and businesses.
IMF Deputy Managing Director Nigel Clarke stated that Pakistan’s continued implementation of reforms under the EFF programme has helped strengthen fiscal and external buffers. He also noted that economic growth accelerated during the first nine months of fiscal year 2026, while inflation remained relatively controlled and the current account stayed broadly balanced.
However, Clarke cautioned that external risks remain significant due to ongoing geopolitical tensions and uncertainty linked to developments in the Middle East. He stressed the importance of maintaining strong economic policies and continuing structural reforms.
IMF Calls for Fiscal Discipline and Energy Sector Changes
The IMF emphasised the need for Pakistan to stay committed to its fiscal targets for the coming years. Maintaining budget discipline, the institution said, will help improve policy credibility and support long-term sustainability.
The lender also highlighted the importance of a cautious monetary policy approach by Pakistan’s central bank to keep inflation expectations under control.
Energy sector reforms remain another major focus area. The IMF said energy pricing should better reflect actual costs while ensuring protection for low-income and vulnerable households.
Structural Reforms and Climate Measures Gain Importance
In addition to fiscal and monetary reforms, the IMF called for broader structural changes, including privatisation of state-owned enterprises and stronger anti-corruption measures.
The climate-related RSF programme is aimed at helping Pakistan improve disaster preparedness, strengthen water management systems, and enhance climate risk reporting mechanisms.
Pakistan’s economy has faced repeated challenges in recent years, including fluctuations in global commodity prices and regional geopolitical tensions. IMF support continues to play a major role in stabilising the economy, rebuilding foreign reserves, and improving investor confidence.