IMF approves $1.2 billion for Pakistan as stability efforts advance
Washington, Dec 9 (LatestNewsX) – The International Monetary Fund (IMF) has given Pakistan almost $1.2 billion in fresh funding, a much‑needed boost as the nation grapples with extreme flooding, soaring inflation, and ongoing fiscal headwinds.
In a recent announcement, the IMF Executive Board finished the second assessment of Pakistan’s Extended Fund Facility (EFF) and the first review of its Resilience and Sustainability Facility (RSF). These reviews released roughly US$1 billion from the EFF and about US$200 million from the RSF, bringing total payouts from both schemes to roughly $3.3 billion.
Even amid “recent devastating floods,” the Fund praised Pakistan’s “strong program implementation,” noting it helped keep the economy steady and improve both financing availability and external conditions. The 37‑month EFF, approved in September 2024, is designed to cement stability, rebuild reserves, widen the tax base, boost competitiveness, overhaul state‑owned entities, and revive the energy sector.
Fiscal discipline has remained a cornerstone. In FY25, Pakistan posted a primary surplus of 1.3 % of GDP, and its gross reserves rose to $14.5 billion at the end of FY25, up from $9.4 billion the year before. Inflation is still high, partly due to flood‑related spikes in food prices, according to the Fund.
Nigel Clarke, IMF Deputy Managing Director and Acting Chair, urged the country to uphold “prudent policies” to reinforce stability and foster “stronger, private‑sector‑led, and sustainable medium‑term growth.” He highlighted the government’s commitment to its FY2026 primary‑balance target—including flood‑relief spending—as a positive sign of fiscal credibility.
Clarke also noted that an “appropriately tight monetary policy stance” has been key to bringing inflation down and should be maintained. He called for deeper interbank foreign‑exchange markets, more flexible exchange rates, and “decisive financial regulation enforcement” to support this effort.
Energy‑sector reforms remain critical, the Fund added, pointing out that tariff tweaks have cut circular debt but that power and gas inefficiencies still need to be addressed. Other structural reforms—such as improved governance of state enterprises, privatization, a better business climate, and more robust economic data—were also flagged as priorities.
The RSF review underscored Pakistan’s vulnerability to extreme weather. The Fund stressed the urgency of climate reforms, such as better disaster‑response coordination, more efficient water use, and enhanced disclosure of climate‑related financial risks.
Overall, Pakistan continues to face external financing constraints, structural deficits, and energy‑sector imbalances, making IMF support a central piece of its economic strategy in recent years.
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