- The EFF and RSF exams are successfully completed.
- Total disbursements could reach $4.5 billion.
- The IMF warns of the risks of conflict 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 Financing Facility and the second review of its Resilience and Sustainability Facility (RSF), with the country receiving a disbursement of around $1.2 billion.
A statement issued by the IMF said the agreement was reached during the third review of the 37-month extended arrangement under the Extended Financing Facility (EFF) and the second review of the 28-month arrangement under the RSF.
The service-level arrangement is subject to approval by the IMF Executive Board.
Upon approval, the global lender said, Pakistan will have access to around $1.0 billion under the EFF and around $210 million under the RSF, bringing the total disbursements under the two agreements to around $4.5 billion.
“Supported by the EFF, ongoing policies have continued to strengthen the economy and restore market confidence,” the Fund said in a statement.
He added that economic activity had gained momentum, inflation and the current account had remained contained and external reserves had continued to strengthen, although the conflict in the Middle East had clouded the outlook by increasing 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 draft memorandums of economic and financial policies after finalizing the outline of the 2026-2027 budget, according to details from The News.
The report said the Fund had sought a fiscal framework centered around an FBR tax collection target of Rs 15.08 trillion for the next fiscal year.
The same report said the IMF also urged Islamabad to revise oil 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 discussing how often 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 spending discipline, increasing spending on health, education and social protection, and improving burden-sharing between the federal government and provinces.
The Fund said revenue mobilization efforts were already bearing fruit, with the FBR pursuing priority actions under its transformation plan, including tighter taxpayer controls, wider use of digital invoicing and production tracking, and improved internal governance. He 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 a sufficiently tight and data-dependent monetary policy and stand ready to increase interest rates if price pressures intensify, particularly due to fluctuations in global food and fuel prices.
He adds that exchange rate flexibility should remain the main buffer against external fallout, particularly those resulting 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 must be avoided.
He also highlighted 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 that the authorities remain committed to strengthening the Benazir Income Support Program (BISP) through inflation-adjusted cash transfers, broader beneficiary coverage, and improved payment systems to protect vulnerable households from volatile food and fuel prices.
He also highlighted broader reform goals, including state-owned enterprise reform, privatization, anti-corruption efforts and climate resilience measures under the FSR.
