IMF staff-level agreement covers the fourth EFF review and third RSF review, subject to Executive Board approval, unlocking about $1 billion and $210 million respectively.
Pakistan is likely to receive around $1.21 billion from the International Monetary Fund (IMF) after the two sides reached a staff-level agreement on the fourth review under the Extended Fund Facility (EFF) and the third review under the Resilience and Sustainability Facility (RSF).
An IMF team led by Iva Petrova held discussions with Pakistani authorities in Karachi and Islamabad from September 23 to October 7, 2026, as part of the 2026 Article IV consultation, the fourth EFF review and the third RSF review.
The staff-level agreement remains subject to approval by the IMF Executive Board. Once approved, Pakistan will have access to about $1 billion (SDR 760 million) under the EFF and approximately $210 million (SDR 154 million) under the RSF, taking total disbursements under the two programmes to around $5.7 billion.
The IMF said Pakistan had successfully navigated the impact of the Middle East conflict with the support of the EFF, while sound policies helped preserve macroeconomic stability.
Real GDP growth reached 4 percent during the first three quarters of FY2026, although higher energy prices and supply disruptions weakened momentum. Full-year FY2026 growth is estimated at 3.6 percent.
Headline inflation moderated to around 10.3 percent in September after peaking in May, while core inflation remained contained. The current account was broadly balanced during FY2026, supported by strong remittances, while gross foreign exchange reserves rose to around $21.5 billion by the end of September.
The IMF noted that sovereign rating upgrades and renewed access to international markets indicated stronger policy credibility. However, it cautioned that risks remained elevated because of geopolitical tensions, volatile energy prices, tighter global financial conditions and trade disruptions.
The Fund said Pakistan’s FY2027 fiscal strategy would remain anchored by an underlying primary surplus of 2 percent of GDP. Tax policy and revenue administration reforms, including risk-based audits, digital invoicing and the use of third-party data, are expected to support revenue targets.
The IMF also called for a comprehensive medium-term tax reform strategy to make the tax system fairer, simpler and more conducive to growth while protecting revenues.
On public finances, the authorities are pursuing reforms to improve budget efficiency and transparency, public investment, procurement and government cash management. The IMF also highlighted efforts to reduce debt rollover risks and servicing costs while developing the domestic government securities market and diversifying its investor base.
The Fund welcomed increased health and education spending, which rose from 2.2 percent of GDP in FY2024 to 2.5 percent in FY2026. The government aims to raise this to 2.8 percent in FY2027.
The IMF also stressed the importance of targeted social protection, while calling for the fuel support scheme to be phased out promptly because of its cost and broad targeting. Any future fuel support should be targeted, time-bound and accommodated within the FY2027 budget.
The IMF urged the State Bank of Pakistan to maintain an appropriately tight monetary policy stance to ensure inflation returns sustainably to its target range. It also stressed continued exchange rate flexibility and further reserve accumulation.
Energy sector reforms remain another priority, with the IMF calling for timely tariff adjustments, improved efficiency, greater private participation in distribution, stronger electricity market competition, gas-sector cost recovery and reduced unaccounted-for gas losses.
Under the Article IV consultation, the IMF also emphasised structural reforms aimed at shifting Pakistan towards higher value-added economic activity. Priorities include stronger competition, reduced regulatory and trade barriers, privatisation, improved state-owned enterprise governance and transparency, and stronger governance and anti-corruption institutions.
The Fund said these reforms, alongside a simpler tax system, greater investment in human and physical capital, a more cost-efficient energy sector and deeper financial markets, would be important for raising productivity, increasing labour force participation and job creation, and supporting private investment and exports.
The IMF also noted progress under the RSF in strengthening Pakistan’s resilience to climate change, including climate considerations in public investment planning and stronger disaster-risk financing and coordination.
Further reforms are being pursued in irrigation water pricing and collection, electricity subsidy targeting, energy-efficiency standards and transport decarbonisation.