IMF and Pakistan have reached a staff-level agreement unlocking $1.2 billion under EFF and RSF programs, marking progress in fiscal reforms, energy sector stability, and climate resilience.
IMF Confirms Agreement With Pakistan
An agreement on the second review of the 37-month Extended Fund Facility (EFF) and the first review of the 28-month Resilience and Sustainability Facility (RSF) between the Government of Pakistan and the International Monetary Fund (IMF) has been made on the staff level. This announcement was undertaken on October 14, 2025 after successful talks in Karachi, Islamabad and Washington DC. Upon passing through the IMF Executive Board, around 1.0 billion US dollars will be given to Pakistan under the EFF and an extra 200 million US dollars under the RSF and the total amount disbursed will be approximately 3.3 billion US dollars.
Good Economic Reform Implementation
The IMF has stated that Pakistan has had good execution of reforms on the EFF-backed program. The government has been very strict in fiscal discipline, monetary stability and social protection. Some of the efforts involve maintaining inflation within the target range of the State Bank of Pakistan (SBP), and assisting the communities that have suffered as a result of the floods and enhancing the financial status of the energy sector. Fiscal austerity is one of the priority areas, and the governments are fulfilling and even exceeding primary balance objectives.
Structural Reforms and Climate Resilience
The RSF element of the agreement will enhance the resilience of Pakistan to the climate-related issues. Recent floods which involved close to seven million individuals highlighted the need to reform. The climate plan by the government involves the promotion of green mobility, management of water, and the disaster-risk financing models. The IMF commended the developmental improvements made by Pakistan in terms of adopting climate-oriented reforms that have conformed to the objective of global sustainability.
Economic Outlook and Growth Challenges
According to IMF, the economic recovery in Pakistan is on track, as the current account recorded a surplus in the first 14 years. Inflation has been tamed and foreign reserves have been bolstered. Nevertheless, the effects of the recent floods still remain to affect the economic performance, especially in the agricultural sector. Now it is projected that GDP will grow by between 3.25 and 3.5 percent FY26, as compared to previous estimates.
Commitment of Government in the Program
The government renewed its commitment towards fiscal and structural reforms. The priorities involve completion of the FY26 budget primary surplus objective, increasing the Benazir Income Support Program (BISP), and increasing investment into health, education, and poverty alleviation. SBP is still dedicated to ensuring that it has an informed monetary policy that has enabled it to keep inflation within the range of its target of 5 7 per cent.
Focus on Energy and Governance Reforms
The government has been committed to enhance the sustainability of the energy industry by ensuring timely changes in tariffs, privatization of non-profitable organizations, and upgrading the national transmission system. These steps would be in a bid to lower circular debt and enhance efficiency. There is also governance reforms that aims at improving transparency, accountability and ease of doing business.
IMF’s Appreciation and Next Steps
The IMF praised Pakistan because it has continued with the momentum of reforms despite the economic and environmental issues. The staff-level accord is now to be presented to the IMF Executive Board that shall be formally handled in the next few weeks. The Fund showed empathy to those who suffered floods and appreciation to Pakistani authorities who worked with the Fund in carrying out the review process. Analysts feel that this deal will enhance investor confidence and will help Pakistan in its greater endeavors of economic stability.
