IMF reaches preliminary agreement with Pakistan for $1.2 billion funding

The International Monetary Fund (IMF) has reached a preliminary agreement with Pakistan that could unlock about USD 1.2 billion in new funding, subject to approval by the IMF Executive Board.

The funding includes about USD 1 billion under the IMF's 37-month Extended Fund Facility (EFF) and USD 210 million under the 28-month Resilience and Sustainability Facility (RSF), which supports countries in addressing climate and other long-term risks.

The staff-level agreement was reached after talks between an IMF team led by Iva Petrova and Pakistani authorities. A staff-level agreement is a provisional understanding between a country's government and an IMF negotiating team before consideration by the IMF Executive Board.

If approved, the funding would take total disbursements under the two programmes to about USD 5.7 billion.

The agreement covers the fourth review of Pakistan's EFF programme and the third review of its RSF arrangement.

“Upon approval, Pakistan will have access to about USD 1.0 billion (SDR 760 million) under the EFF and about USD 210 million (SDR 154 million) under the RSF, bringing total disbursements under the two arrangements to about USD 5.7 billion,” Petrova said.

She said Pakistan had successfully navigated the impact of the West Asia conflict with support from the EFF, while its economic policies had helped preserve macroeconomic stability.

Real GDP growth reached 4 per cent in the first three quarters of FY26, although higher energy prices and supply disruptions weakened momentum. Growth for FY26 is estimated at 3.6 per cent.

Headline inflation, after peaking in May, moderated to about 10.3 per cent in September, while core inflation remained contained, Petrova said.

Pakistan's current account was broadly balanced in FY26, supported by strong remittances. Gross reserves rose to about USD 21 billion by the end of September, while sovereign rating upgrades and renewed access to international markets indicated stronger policy credibility, she said.

However, Petrova cautioned that risks remained high, particularly from geopolitical tensions, volatile energy prices, tighter global financial conditions and trade disruptions.