ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have reached a staff-level agreement on the fourth review of the $7 billion Extended Fund Facility (EFF) and the third review of the Resilience and Sustainability Facility (RSF).
The agreement followed discussions held in Islamabad and Karachi from September 23 to October 7 under the 2026 Article IV consultation and the two IMF-supported programmes.
According to IMF Mission Chief Iva Petrova, the agreement remains subject to approval by the IMF Executive Board. Once approved, Pakistan will receive about $1 billion under the EFF and approximately $210 million under the RSF.
The disbursements will bring total funds released under the two arrangements to around $5.7 billion.
The IMF said Pakistan’s economy had maintained macroeconomic stability despite the impact of the Middle East conflict. Real GDP growth reached 4% during the first three quarters of fiscal year 2026, while full-year growth was estimated at 3.6%.
Headline inflation moderated to around 10.3% in September after peaking in May, while core inflation remained contained. The current account was broadly balanced, supported by strong remittances, while foreign exchange reserves increased to approximately $21.5 billion by the end of September.
The Fund, however, highlighted risks from geopolitical tensions, volatile energy prices, tighter global financial conditions and trade disruptions.
Under the FY27 programme, Pakistan has committed to maintaining fiscal discipline, with an underlying primary surplus target of 2% of GDP. The IMF also stressed tax reforms, stronger revenue administration, improved public financial management and development of the domestic debt market.
The Fund called for greater spending on health and education, targeted social protection and a gradual phase-out of the broad fuel support scheme.
The IMF also urged Pakistan to maintain an appropriate monetary policy and exchange-rate flexibility while strengthening the energy sector through timely tariff adjustments and reforms to reduce circular debt.
Meanwhile, the Article IV consultation focused on structural reforms, including privatisation, competition, SOE governance, anti-corruption measures and reducing regulatory and trade barriers.
