Prime Minister Shehbaz Sharif addresses a ceremony in Islamabad marking International Youth Day on August 12, 2025. Photo: Express
Prime Minister Shehbaz Sharif confirmed a staff-level agreement with the International Monetary Fund to disburse $1.2 billion and expressed hope that it would be the last such program for Pakistan.
Chairing a cabinet meeting on Thursday, he said the time had come to “free us from the burden of debt”. Hard work is the first condition of national independence and dignity,” said Shehbaz, adding that Pakistan’s economic stability would strengthen its global voice and respect.
The IMF announced the agreement on Wednesday to release the next loan tranches of $1.2 billion, after Islamabad so far agreed to the old budget targets before floods and to publish the government report before the board meeting.
After approval by the board, Pakistan will have access to about $1 billion under the EFF and another $200 million under the RSF, Iva Petrova said. Cumulatively, the IMF will disburse $3.1 billion under the EFF out of the $7 billion agreement.
Read more: The IMF unlocks DKK 1.2 billion. USD after the government revisits pre-flood pledges
Pakistan and the IMF negotiated for three weeks to reach a staff-level agreement. One of the annoyances was the lack of finalization of the fiscal figures reflecting the impact of the floods on the budget.
Also, the IMF on Tuesday forecast Pakistan’s economic growth rate of 3.6% for the current fiscal year as Finance Minister Muhammad Aurangzeb expressed hope that a staff-level agreement with the lender for two tranches worth $1.2 billion would be reached this week.
The IMF released the World Economic Outlook report from Washington where Pakistan’s economic growth rate was 3.6%. But it clarified that Pakistan’s economic “projections do not yet reflect the impact of floods in the summer of 2025, the effects of which are still being assessed”.
Read also: IMF projects Pakistan’s growth at 3.6%
The negative impact of the floods on economic growth, inflation, the budget and the external sector is one of the outstanding issues hampering the finalization of the staff-level agreement for the completion of the second review of the rescue package, according to government sources.
Against the forecast of 3.6% economic growth, the sources said IMF staff during last week’s endless discussions had expected growth of 3% to 3.5%.
They said the IMF’s view was that the recent floods have weighed on the economic outlook, especially for the agriculture sector given the damage to major Kharif crops.
The government has already lowered its ambitious target of 4.2% to 3.5%, while the World Bank has made a forecast of 2.6% for the same reason.
