December 9, 2025 — The International Monetary Fund (IMF) has completed Pakistan’s second review under the Extended Fund Facility (EFF) and the first review of the Resilience and Sustainability Facility (RSF), paving the way for a fresh disbursement of approximately US$1.2 billion.
The decision comes despite Pakistan’s challenging economic landscape and the devastation caused by recent floods, reflecting what the IMF calls “strong program implementation.”
$1.2 Billion Released as IMF Praises Reform Progress
The IMF Executive Board’s approval enables Pakistan to immediately access US$1 billion under the EFF and US$200 million under the RSF. This brings total disbursements under both arrangements to US$3.3 billion, supporting Islamabad’s ongoing economic stabilization and climate resilience efforts.
Pakistan’s 37-month EFF program, approved in September 2024, focuses on restoring macroeconomic stability, strengthening public finances, broadening the tax base, rebuilding reserves, and enhancing competitiveness. Meanwhile, the 28-month RSF, launched in May 2025, aims to bolster Pakistan’s climate resilience, improve disaster management, and strengthen the governance of crucial public investment processes.
Economy Showing Signs of Stability
According to the IMF, Pakistan has made meaningful progress in stabilizing the economy:
• A primary budget surplus of 1.3% of GDP was recorded during FY25.
• Foreign exchange reserves rose to US$14.5 billion, up from US$9.4 billion the previous year.
• Inflation saw temporary pressure due to flood-related disruptions but is expected to ease in the coming months.
The Fund noted that reforms in taxation, SOE governance, public service delivery, and energy sector performance remain essential to sustaining Pakistan’s recovery.
Climate Reforms Urgent After Devastating Floods
The IMF stressed that Pakistan’s weakening climate resilience—highlighted by severe floods—requires accelerated reforms. The RSF-supported initiatives aim to:
• Strengthen disaster preparedness and federal-provincial coordination
• Improve water resource efficiency through better pricing and management
• Enhance climate-risk disclosures for banks and corporates
• Support Pakistan’s mitigation targets and reduce long-term macroeconomic risks
IMF Calls for Continued Discipline
Deputy Managing Director Nigel Clarke emphasized that Pakistan must maintain tight monetary policy, ensure exchange rate flexibility, deepen financial market reforms, and push ahead with energy sector restructuring.
He praised the government’s commitment to achieving the FY2026 fiscal targets despite flood-related relief needs, adding that further tax reforms, improved governance, sustainable energy pricing, and SOE restructuring are crucial for long-term stability and private sector-led growth.
Clarke noted that reducing Pakistan’s exposure to climate shocks would not only protect lives and infrastructure but also strengthen macroeconomic and fiscal sustainability.