- EFF and RSF reviews are successfully completed.
- The total payouts could rise to $4.5 billion.
- The IMF highlights conflict risks in the Middle East.
The International Monetary Fund (IMF) said on Friday it had reached a staff-level agreement with Pakistan on the third review of its Extended Fund Facility and the second review of its Resilience and Sustainability Facility (RSF), in which the country received a disbursement of about $1.2 billion.
A statement issued by the IMF said the agreement was reached on the third review of the 37-month extended arrangement under the Extended Fund Facility (EFF) and the second review of the 28-month arrangement under the RSF.
The agreement at staff level must be approved by the IMF’s executive board.
Upon approval, the global lender said, Pakistan will have access to about $1.0 billion under the EFF and about $210 million under the RSF, bringing total disbursements under the two schemes to about $4.5 billion.
“Supported by the EFF, ongoing policies have continued to strengthen the economy and rebuild market confidence,” the foundation said in a statement.
It added that economic activity had picked up, inflation and the balance of payments had remained contained and external buffers had continued to strengthen, although the conflict in the Middle East had clouded the outlook by raising the risk of volatile energy prices, tighter global financial conditions, higher inflation and pressures on growth and the external account.
As part of the process leading to the staff-level agreement, Pakistani authorities and the IMF exchanged drafts of the memorandum on economic and financial policies after finalizing the key lines of the 2026-27 budget, according to background details provided by The News.
The report said the fund had sought a fiscal framework centered on an FBR tax collection target of Rs15.08 trillion for the next financial year.
The same report said the IMF had also urged Islamabad to revise oil, petroleum and lubricant prices more frequently to better reflect international market movements. Pakistan has already moved from fortnightly to weekly price adjustments, while officials are said to be debating how much more frequently prices should be reset.
In its statement today, the IMF said the authorities’ policy priorities include maintaining a prudent fiscal stance, broadening the tax base, strengthening expenditure discipline, expanding spending on health, education and social protection and improving federal-provincial burden-sharing.
The fund said revenue mobilization efforts were already yielding results, with the FBR pursuing priority actions under its transformation plan, including stronger taxpayer audit, wider use of digital invoicing and production monitoring, and improved internal governance. It added that the Tax Policy Office was developing a medium-term reform strategy aimed at revenue neutrality and tax policy stability.
The IMF also said the State Bank of Pakistan should maintain an appropriately tight and data-driven monetary policy and be ready to raise interest rates if price pressures intensify, including from fluctuations in global food and fuel prices.
It added that exchange rate flexibility should remain the primary buffer against external spillovers, including those stemming from the conflict in the Middle East.
On the energy side, the fund said, “Sustainability must be maintained through timely tariff adjustments that ensure cost recovery,” while untargeted energy subsidies should be avoided.
It also pointed to structural reforms aimed at reducing circular debt, improving transmission and distribution, privatizing inefficient generation companies, completing the transition to a competitive electricity market and facilitating the transition to renewable energy.
The IMF further said authorities remain committed to strengthening the Benazir Income Support Program (BISP) through inflation-adjusted cash transfers, wider beneficiary coverage and improved payment systems to protect vulnerable households from fluctuations in food and fuel prices.
It also highlighted broader reform objectives, including SOE reform, privatisation, anti-corruption and climate resilience under the RSF.
