ISLAMABAD – The International Monetary Fund on Saturday announced a staff-level agreement (SLA) with Pakistan for the disbursement of approximately $1.2 billion, following the successful completion of the third review under the Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF).
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According to IMF mission chief Iva Petrova, the agreement—subject to board approval—will provide about $1.0 billion under the EFF and $210 million under the RSF, bringing total disbursements under both programmes to around $4.5 billion.
The IMF broadly endorsed Pakistan’s fuel pricing policy introduced in response to the ongoing Middle East crisis, noting that programme implementation remains aligned with key economic objectives. These include strengthening public finances, maintaining inflation within the State Bank of Pakistan target range, improving energy sector viability, and advancing structural reforms.
The Fund noted that Pakistan’s economy has shown signs of recovery, with improved market confidence, controlled inflation, and a stable current account balance. However, it warned that the ongoing conflict in the Middle East poses risks through volatile energy prices and tighter global financial conditions, which could pressure inflation and economic growth.
The IMF emphasised the importance of maintaining a prudent fiscal policy, targeting a primary surplus of 1.6 percent of GDP in FY26 and 2 percent in FY27. Efforts to broaden the tax base and improve revenue collection are underway through reforms led by the Federal Board of Revenue, including digital invoicing, enhanced audits, and improved governance.
On social protection, the Fund highlighted plans to expand and strengthen the Benazir Income Support Programme to shield vulnerable populations from rising food and fuel costs through increased coverage and inflation-adjusted cash transfers.
The IMF also stressed the need for continued monetary discipline, with the central bank prepared to adjust interest rates if inflationary pressures rise. Exchange rate flexibility was described as a key tool to absorb external shocks.
In the energy sector, the Fund called for timely tariff adjustments to ensure cost recovery and avoid subsidies, while advancing reforms such as improving transmission systems, privatising inefficient power companies, and transitioning toward renewable energy.
The statement further underscored the importance of structural reforms, including privatisation of state-owned enterprises, reducing regulatory burdens, and strengthening anti-corruption measures to support private sector growth.
Additionally, the IMF acknowledged progress on climate reforms under the RSF, including initiatives to promote green mobility, improve climate risk management, and enhance disaster preparedness.
The agreement follows discussions held in Islamabad and Karachi between February 25 and March 2, with further consultations conducted virtually. The IMF described the talks as “fruitful,” reaffirming its support for Pakistan’s ongoing economic stabilisation efforts.
