KARACHI, May 9 — The International Monetary Fund (IMF) announced on Friday the completion of its latest reviews for Pakistan, authorizing an immediate release of approximately $1.32 billion in funding. The Executive Board concluded the third review of the $7 billion Extended Fund Facility (EFF) and the second review of the $1.4 billion Resilience and Sustainability Facility (RSF). This latest tranche brings total disbursements under the current arrangements to $4.8 billion, providing a critical buffer as the country navigates the economic fallout of the ongoing Middle East conflict and volatile global commodity markets.
#The International Monetary Fund (IMF) board has approved a fresh disbursement for #Pakistan, comprising a fourth tranche of USD 1 billion under the Extended Fund Facility and USD 210 million under the Resilience and Sustainability Facility.
— Nukta Business (@NuktaBusiness) May 8, 2026
Highlights
- The IMF Board cleared $1.1 billion under the EFF and $220 million via the RSF.
- Total disbursements to Pakistan under both arrangements now stand at $4.8 billion.
- Pakistan is projected to achieve a primary fiscal surplus of 1.6% of GDP in FY26.
- Gross foreign exchange reserves rose to $16 billion as of December 2025.
- The State Bank of Pakistan recently raised the key policy rate to 11.5% to anchor inflation.
- The IMF emphasized exchange rate flexibility as the primary “shock absorber” for the economy.
Macroeconomic Stability and Performance
Nigel Clarke, IMF Deputy Managing Director, praised Pakistan’s “strong program implementation,” noting that policy efforts have successfully stabilized the economy and rebuilt investor confidence. Despite a challenging global environment, GDP growth has accelerated while the current account remained broadly balanced through the first nine months of the 2026 fiscal year. However, the IMF warned that inflation remains a concern as higher global commodity prices continue to impact domestic energy costs, requiring a “persistently tight” monetary stance.
IMF Board Greenlights $1.2 Billion Disbursement for Pakistan From Current Programs
— First Squawk (@FirstSquawk) May 8, 2026
Navigating Global and Regional Shocks
The disbursement comes at a vital time as Pakistan faces renewed pressure from rising oil prices and supply chain disruptions caused by tensions in the Strait of Hormuz. The IMF noted that maintaining strong macroeconomic policies is essential to managing these external shocks. The lender underscored the importance of keeping domestic fuel, electricity, and gas prices aligned with actual costs to safeguard the energy sector’s financial viability and ensure long-term fiscal sustainability.
Climate Resilience and Structural Reforms
A significant portion of the new funding—$220 million—is specifically allocated toward climate support under the RSF. The IMF highlighted that reducing Pakistan’s vulnerability to climate-related disasters is intrinsically linked to its fiscal health. Beyond climate goals, the Fund urged the government to accelerate structural reforms and deepen the foreign exchange market. By continuing to rebuild reserves and allowing for exchange rate flexibility, Pakistan aims to foster a more competitive and resilient economy capable of sustainable medium-term growth.
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