In a significant economic development, the International Monetary Fund (IMF) Executive Board has approved a $7 billion Extended Fund Facility (EFF) for Pakistan. The Prime Minister’s Office (PMO) announced this on Wednesday, marking a crucial moment for the country’s struggling economy.
According to the PMO’s statement, the IMF will immediately release an initial tranche of $1.1 billion, which is expected to bolster Pakistan’s foreign exchange reserves. The approval by the IMF comes after a 37-month agreement was reached between Pakistani authorities and the IMF team in July. This agreement, valued at approximately Special Drawing Rights (SDR) 5,320 million (equivalent to USD 7 billion), was contingent on securing necessary financing assurances from Pakistan’s development and bilateral partners.
The official confirmation from the IMF is still awaited, but the PMO’s announcement underscores the importance of this agreement for the country’s financial stability. The EFF aims to support Pakistan’s economic reform program and assist the government in addressing the country’s fiscal and external challenges.
Earlier this month, Jameel Ahmad, Governor of the State Bank of Pakistan, had expressed optimism about securing external financing assurances needed for the IMF’s approval. Ahmad, during an analyst briefing after the monetary policy announcement, stated that the government had successfully arranged the required external financing. He anticipated that the IMF Executive Board would consider Pakistan’s loan request in September.
“We are hopeful the IMF will take up Pakistan’s case in September,” Ahmad had said, underscoring the importance of the deal.
The same sentiment was echoed by IMF spokesperson Julie Kozack, who, during a scheduled press briefing, confirmed that the IMF Board meeting was set for September 25. Kozack confirmed that this meeting was planned after Pakistan had secured the necessary financing assurances from its development partners.
Economic analysts view the IMF program as a vital lifeline for Pakistan. The program not only provides a roadmap for structural reforms but also cushions Pakistan’s foreign exchange reserves, which have been under severe pressure in recent months. With inflation and debt repayments mounting, the IMF’s approval is expected to help stabilize the country’s financial situation, support its economic recovery, and create a foundation for sustainable growth.
The announcement has brought a measure of relief to markets and policymakers, with hopes that the program will pave the way for further economic stability and international financial support for Pakistan.
