ISLAMABAD: The International Monetary Fund has reached a staff-level agreement with Pakistan on the third review of its Extended Fund Facility and the second review of the Resilience and Sustainability Facility, paving the way for a disbursement of about $1.2 billion.
In a statement, the IMF said the agreement covers the third review of the 37-month Extended Arrangement under the Extended Fund Facility (EFF) and the second review of the 28-month arrangement under the RSF. The agreement is subject to approval by the IMF Executive Board.
Upon approval, Pakistan will gain access to about $1.0 billion under the EFF and approximately $210 million under the RSF, bringing total disbursements under the two programmes to around $4.5 billion.
The Fund noted that policies supported by the EFF have helped strengthen the economy, rebuild market confidence and sustain economic momentum. Inflation and the current account have remained contained, while external buffers have improved, although the Middle East conflict poses risks through volatile energy prices and tighter global financial conditions.
Fiscal and monetary priorities
According to the IMF, Pakistan’s policy priorities include maintaining a prudent fiscal stance, broadening the tax base, strengthening expenditure discipline and expanding spending on health, education and social protection.
Revenue mobilisation efforts by the Federal Board of Revenue are yielding results through stronger taxpayer audits, digital invoicing, production monitoring and improved governance. The Tax Policy Office is also working on a medium-term reform strategy to ensure tax stability.
The IMF advised the State Bank of Pakistan to maintain a tight and data-driven monetary policy and remain ready to raise interest rates if inflationary pressures intensify. It stressed that exchange-rate flexibility should remain the primary buffer against external shocks.
Energy and structural reforms
On the energy front, the IMF emphasised the need for timely tariff adjustments to ensure cost recovery and avoid untargeted subsidies. Structural reforms will focus on reducing circular debt, privatising inefficient generation companies, improving transmission and distribution, and accelerating the transition to a competitive electricity market and renewable energy.
The Fund also highlighted the government’s commitment to strengthening the Benazir Income Support Programme through inflation-adjusted cash transfers, wider beneficiary coverage and improved payment systems to protect vulnerable households.
Broader reform efforts include state-owned enterprise restructuring, privatisation, anti-corruption measures and climate resilience initiatives under the RSF.