The International Monetary Fund (IMF) has approved a $1 billion disbursement to Pakistan following the successful completion of the first review under the country’s ongoing Extended Fund Facility (EFF). The latest release brings total disbursements under the 37-month arrangement, approved in September 2024, to approximately $2.1 billion.
Alongside this, the IMF executive board also greenlit Pakistan’s request for an additional arrangement under the Resilience and Sustainability Facility (RSF), granting access to about $1.4 billion. The RSF is expected to enhance Pakistan’s resilience to natural disasters and reinforce climate-related fiscal and investment reforms.
Macroeconomic Stability and Inflation Control Show Progress
The IMF praised Pakistan’s policy efforts, noting that significant progress had already been made despite global headwinds. In a formal statement, the Fund said:
“Pakistan’s policy efforts under the EFF have already delivered significant progress in stabilizing the economy and rebuilding confidence, amidst a challenging global environment.”
Key economic indicators signal a positive shift. Pakistan achieved a primary surplus of 2% of GDP in the first half of FY25, keeping it on track to reach the full-year target of 2.1% of GDP. Inflation dropped to a historic 0.3% in April, enabling the State Bank of Pakistan to lower its policy rate by 1,100 basis points since June 2025.
In terms of external buffers, gross foreign exchange reserves rose to $10.3 billion by end-April, up from $9.4 billion in August 2024. The IMF projects these reserves will climb to $13.9 billion by the end of June 2025, continuing to strengthen over the medium term.
Resilience and Sustainability Facility to Address Climate Vulnerabilities
The newly approved RSF will bolster Pakistan’s capacity to respond to climate risks, improve water management, and enhance public investment processes. Key priorities under the RSF include:
- Efficient use and pricing of scarce water resources
- Stronger intergovernmental coordination on disaster response and financing
- Building resilience to natural disasters and environmental risks
Nigel Clarke, Deputy Managing Director and Chair of the IMF Board, acknowledged the government’s progress but stressed the need for continued vigilance:
“Pakistan has made important progress in restoring macroeconomic stability despite a challenging environment. Inflation is sharply lower and external buffers are notably stronger. However, risks to the outlook remain elevated, particularly from global economic policy uncertainty, rising geopolitical tensions, and domestic vulnerabilities.”
He added that the authorities must maintain sound macroeconomic policies and accelerate structural reforms to ensure sustainable, private sector-led growth in the medium term.
Sustained Reforms Critical to Long-Term Growth
Pakistan’s engagement with the IMF through the EFF and RSF arrangements is part of a broader strategy to address macroeconomic imbalances, climate vulnerability, and investment shortfalls. With disbursements now exceeding $2 billion and additional funding secured, the government is poised to navigate ongoing challenges while building momentum for sustainable development.
