The International Monetary Fund (IMF) Executive Board has approved a loan of $1.29 billion for Pakistan, according to local media reports from Monday.
This approval follows a staff-level agreement reached in October between Pakistan and the IMF regarding the country’s ongoing loan programs. Under the $7 billion Extended Fund Facility (EFF) program, Pakistan is set to receive more than $1 billion, which includes the first tranche of over $200 million from the $1.3 billion Rapid Financing Instrument (RFI).
With the release of these funds, total disbursements from both loan programs will amount to $3.3 billion, as reported by sources. Pakistan has already received two instalments under the EFF program.
The IMF’s Executive Board has also approved the second economic review, with sources indicating that the IMF has characterised the implementation of the ongoing loan programs as “strong.” The IMF has assured the government of its continued support for its economic reforms.
The release of $1.29 billion is expected to further strengthen Pakistan’s foreign exchange reserves. An IMF team, led by Iva Petrova, conducted discussions in Karachi and Islamabad from September 24 to October 8, and in Washington, D.C., to finalise the staff-level agreement.
The IMF highlighted robust program implementation and emphasised priorities such as maintaining fiscal discipline while supporting flood-affected households, keeping inflation within the target range set by the State Bank of Pakistan, restoring the viability of the energy sector, and advancing structural reforms.
The Fund also noted progress on the climate agenda backed by the Resilience and Sustainability Facility (RSF), underscoring that recent floods illustrate the urgent need for consistent, comprehensive reforms to mitigate climate risks.
Before the Board meeting, the lender released its Governance and Corruption Diagnostic (GCD) report, which warns that persistent corruption and weak institutions continue to hinder the country’s economic development, even as it stabilises under the EFF.
