Pakistan Reaches Staff-Level Agreement With IMF For USD 1.2 Billion Loans

Islamabad has reached a staff-level agreement (SLA) with the International Monetary Fund (IMF), paving the way for the country to access USD 1.2 billion under two loan programmes, pending approval from the IMF Executive Board, PTI reported.

According to PTI, the agreement provides Pakistan with USD 1 billion under the IMF’s Extended Fund Facility (EFF) and USD 200 million under the Resilience and Sustainability Facility (RSF). The SLA follows negotiations concluded last week between an IMF mission led by Iva Petrova and Pakistani authorities on the second review of the 2024 EFF and the first review of the RSF climate loan agreed this year.

In a statement issued on Wednesday, Petrova said the SLA remains subject to approval by the IMF Executive Board. She noted that Pakistan’s economic programme, supported by the EFF, is maintaining macroeconomic stability and restoring market confidence.

“Recovery remains on track, with the FY25 current account recording a surplus, the first in 14 years, fiscal primary balance surpassing programme targets, inflation contained, external buffers strengthening, and financial conditions improving as sovereign spreads have narrowed significantly,” Petrova said, according to PTI.

However, she added that recent floods had affected the country’s economic outlook, particularly in the agriculture sector, reducing the projected FY26 GDP growth to about 3.25-3.5 per cent.

Petrova also highlighted progress on policy priorities, reporting that Pakistani authorities reaffirmed their commitment to the EFF and RSF-supported programmes, prudent macroeconomic policies, and ongoing structural reforms. Authorities remain committed to achieving a FY26 budget primary surplus of 1.6 per cent of GDP, backed by revenue mobilisation through tax policy and compliance measures, and are prepared to take further action if revenue falls short of targets.

She said the government is assessing flood damage and providing urgent relief support in affected provinces through reallocations in federal and provincial budgets. Efforts are also underway to strengthen public financial management, enhance revenue mobilisation, and broaden fiscal burden-sharing between federal and provincial authorities.

On monetary policy, Petrova noted that the State Bank of Pakistan is committed to a prudent stance to keep inflation within its target range of five to seven per cent. Regarding the power sector, Pakistan intends to prevent the accumulation of circular debt through timely tariff adjustments that ensure cost recovery while maintaining a progressive tariff structure.

Petrova added that the recent floods, along with those in 2022, emphasise the importance of strengthening Pakistan’s climate resilience.

(With inputs from PT)