Islamabad, March 28, 2026 – Pakistan is set to receive approximately $1.21 billion in financial assistance after the International Monetary Fund (IMF) announced a staff-level agreement with Pakistani authorities on key economic reviews under its ongoing support programs.
The agreement covers the third review of the 37-month Extended Fund Facility (EFF) and the second review of the 28-month Resilience and Sustainability Facility (RSF). However, the deal is subject to approval by the IMF Executive Board before funds are officially disbursed.
Once approved, Pakistan will gain access to around $1.0 billion under the EFF and $210 million under the RSF, bringing total disbursements under both arrangements to approximately $4.5 billion.
IMF Assessment: Economic Stability Improving
An IMF mission led by Ms. Iva Petrova conducted discussions in Karachi and Islamabad from February 25 to March 2, 2026, with follow-up virtual meetings. The IMF noted that Pakistan’s economy has shown signs of improvement, supported by ongoing reforms and policy measures.
According to the IMF, economic activity gained momentum after recovery in FY25, while inflation and the current account deficit remained contained. External financial buffers have also strengthened, reflecting improved stability.
However, the IMF warned that global risks—particularly the ongoing conflict in the Middle East—could impact Pakistan through rising energy prices and tighter global financial conditions, potentially increasing inflation and slowing growth.
Key Policy Priorities Highlighted
The IMF emphasized several key reform areas for Pakistan:
Fiscal Discipline and Debt Reduction
Pakistan aims to maintain a primary fiscal surplus of 1.6% of GDP in FY26 and further improve it to 2% in FY27. This will be supported by broader tax collection, controlled spending, and improved federal-provincial coordination.
Tax and Revenue Reforms
The Federal Board of Revenue (FBR) is implementing digital invoicing, improved audits, and governance reforms. A newly established Tax Policy Office is working on a long-term strategy to ensure a stable and fair tax system.
Social Protection Expansion
The government plans to strengthen the Benazir Income Support Programme (BISP), including inflation-adjusted cash transfers and expanded coverage to protect vulnerable households.
Monetary Policy and Inflation Control
The State Bank of Pakistan remains committed to keeping inflation within target levels and may adjust interest rates if needed. Exchange rate flexibility will continue to absorb external shocks.
Energy Sector Reforms
Pakistan is working to eliminate circular debt, ensure cost recovery, and reduce subsidies. Reforms include improving energy efficiency, expanding renewable energy, and advancing market-based electricity systems.
Structural Reforms and Climate Resilience
The IMF also highlighted ongoing structural reforms to improve governance, boost productivity, and encourage private sector growth. Efforts include privatization, reducing state intervention, and strengthening anti-corruption measures.
Climate resilience is another key focus under the RSF, with Pakistan working on green mobility, improved water management, and climate-related financial risk systems.
Outlook
The IMF concluded that Pakistan’s reform efforts are helping stabilize the economy, though external risks remain. Continued commitment to reforms will be critical in sustaining growth and ensuring long-term financial stability.