IMF, Pakistan Reach Staff-Level Agreement for $1.2 Billion in Loans

ISLAMABAD, Oct 15, 2025 — The International Monetary Fund (IMF) announced on Wednesday that it has reached a staff-level agreement (SLA) with Pakistan, paving the way for the disbursement of $1.2 billion in financial assistance — subject to approval from the IMF Executive Board.

The agreement includes $1 billion under the Extended Fund Facility (EFF) and $200 million under the Resilience and Sustainability Facility (RSF), bringing total disbursements under both programmes to approximately $3.3 billion.

The announcement follows the conclusion of a second review mission led by IMF’s Iva Petrova, who noted that Pakistan’s economy is showing signs of stabilization. “The recovery remains on track,” Petrova stated, citing a current account surplus — the first in 14 years — and a fiscal primary balance exceeding programme targets.

However, recent floods have negatively impacted economic outlook, especially the agriculture sector, bringing down Pakistan’s FY26 GDP growth projection to 3.25–3.5%. Petrova highlighted the country’s vulnerability to climate-related risks and stressed the need for greater climate resilience.

Pakistan has reaffirmed its commitment to fiscal discipline, aiming for a 1.6% budget primary surplus in FY26 through tax reforms and enhanced revenue collection. Social protection also remains a priority, with efforts underway to expand BISP coverage and increase spending on health and education.

The State Bank of Pakistan remains committed to a prudent monetary policy, ready to adjust interest rates if inflation — projected between 5–7% — rises unexpectedly due to post-flood disruptions.

The IMF also underscored Pakistan’s dedication to tackling the country’s longstanding energy sector issues, particularly circular debt, through tariff reforms, privatisation of inefficient units, and improved distribution efficiency.

If approved, the new funding will boost Pakistan’s foreign reserves and support economic reforms critical for long-term stability.

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