Pakistan receives $1.3 billion IMF tranche as country seeks relief from economic crisis

Pakistan has received $1.3 billion from the International Monetary Fund under two ongoing financial assistance programmes aimed at stabilising the country’s economy, improving external sector resilience and strengthening foreign exchange reserves, the central bank said on Wednesday.

According to the State Bank of Pakistan, the funds were transferred on Tuesday after the IMF Executive Board approved fresh disbursements under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF).

The IMF cleared around $1.1 billion under the EFF programme and nearly $220 million under the RSF arrangement, which focuses on helping countries tackle climate-related vulnerabilities and strengthen long-term economic resilience.

In a statement posted on X, the State Bank said the IMF Executive Board completed the third review of Pakistan’s EFF programme during its meeting held on 8 May and approved disbursement of SDR (Special Drawing Rights) 760 million.

The lender also approved the second tranche of SDR 154 million under the RSF programme.

“Accordingly, SBP has received SDR 914 million (equivalent to about USD 1.3 billion) under the EFF and RSF on May 12 from the IMF,” the central bank said.

The bank added that the latest inflow would be reflected in Pakistan’s foreign exchange reserves position for the week ending 15 May.

Part of larger IMF assistance framework

The latest release forms part of a broader IMF support package agreed with Pakistan in September 2024.

Under the EFF programme, the IMF had committed to providing $7 billion to Pakistan over a 37-month period to support macroeconomic stability, fiscal reforms and structural adjustments.

Separately, the IMF had approved another $1.4 billion under the RSF to support climate adaptation and resilience measures in a country frequently affected by floods, extreme weather events and environmental stress.

With the latest tranche, Pakistan has so far received around $4.5 billion from the IMF under the combined assistance packages worth $8.4 billion.

Crucial support for struggling economy

Pakistan has remained heavily dependent on IMF assistance in recent years to avoid external payment crises and shore up dwindling foreign exchange reserves.

The country continues to face serious economic challenges, including high inflation, pressure on the Pakistani rupee, elevated import costs, rising debt obligations and persistent balance of payments concerns.

The IMF approval came after Pakistan reportedly performed better on several agreed fiscal and monetary targets, although economists remain divided over the durability of the country’s economic recovery during the second half of the current fiscal year.

Financial analysts say the fresh IMF inflow is expected to provide temporary breathing space to Pakistan’s external sector, improve investor confidence and help stabilise reserves amid continuing global and regional economic uncertainty.

However, experts also caution that long-term recovery will depend on Pakistan’s ability to sustain reforms, improve exports, broaden its tax base and reduce dependence on external borrowing.