WASHINGTON: The International Monetary Fund (IMF) on Friday approved the immediate disbursement of \$1 billion to Pakistan under its ongoing \$7 billion Extended Fund Facility (EFF), while also granting a new \$1.4 billion arrangement under the Resilience and Sustainability Facility (RSF) to help build climate resilience.
The IMF Executive Board completed the first review of Pakistan’s reform programme under the EFF, enabling the disbursement and bringing total support to approximately \$2.1 billion. Additionally, the RSF agreement spans 28 months and supports Pakistan’s efforts to combat climate-related vulnerabilities and bolster economic sustainability.
According to the IMF, Pakistan’s macroeconomic indicators show marked improvement. The country posted a primary surplus of 2% of GDP in the first half of FY25, with inflation falling to a historic low of 0.3% in April. The State Bank of Pakistan responded by cutting policy rates by 1,100 basis points since June 2025. Reserves also grew to \$10.3bn in April and are projected to reach \$13.9bn by June 2025.
The RSF support will focus on climate adaptation measures, including carbon levies, water pricing reforms, electricity tariff revisions, and liberalisation of the automobile sector.
Prime Minister Shehbaz Sharif welcomed the IMF’s approval, calling it a testament to Pakistan’s economic recovery and a “defeat of India’s baseless propaganda.” He praised the government’s progress on tax reforms, energy sector improvements, and private sector development, noting that the country is firmly on the path to sustainable growth.
The RSF disbursements will be tied to specific climate-related reforms and projects. The IMF is also expected to send a mission to Pakistan shortly to help finalise the FY2025-26 budget, with the implementation of new fiscal measures starting July 1, including subsidy cuts and reduced development spending to support ongoing consolidation.
