The International Monetary Fund (IMF) and Pakistan have reached a staff-level agreement on the third review of the Extended Fund Facility (EFF) and the second review of the Resilience and Sustainability Facility (RSF).
This staff-level agreement is a crucial step for Pakistan to unlock a loan tranche of $1.2 billion. Approval by the IMF Executive Board is still required. Once approved, Pakistan will access around US$1 billion under the EFF and US$210 million under the RSF, raising total disbursements under both programs to about US$4.5 billion.
An IMF team, led by Ms. Iva Petrova, conducted discussions in Karachi and Islamabad from February 25 to March 2, 2026, and continued virtually afterward. Petrova said the agreement reflects Pakistan’s ongoing efforts to stabilize the economy and strengthen market confidence.
“Economic activity gained momentum after recovery in FY25. Inflation and the current account remained contained, and external buffers improved,” she noted. However, she warned that the Middle East conflict may create uncertainty due to rising energy prices and tighter global financial conditions.
Pakistan’s authorities have outlined policy priorities to ensure macroeconomic stability and inclusive growth. These include maintaining a primary fiscal surplus of 1.6% of GDP in FY26, broadening the tax base, and increasing spending on health, education, and social protection.
Structural reforms are underway, with the Federal Board of Revenue enhancing audits, digital invoicing, and governance. Social protection programs like the Benazir Income Support Program are being adjusted for inflation to support vulnerable households.
Monetary policy will remain data-driven, with the State Bank of Pakistan ready to adjust interest rates to control inflation. The government is also focusing on energy sector efficiency, renewable transition, privatization, and anti-corruption reforms. Climate resilience programs, including green mobility and improved water systems, are being strengthened.
The staff-level agreement marks a significant step for Pakistan, signaling continued IMF support and reinforcing the country’s commitment to economic reforms and sustainable development.
In other news read more about: Pakistan and IMF Reach Staff-Level Agreement for Release of $1.1 Billion Tranche under SBA
