Pakistan locks in $1.21bn IMF lifeline

March 28, 2026 (MLN): Pakistan has unlocked about $1.21 billion in fresh funding after reaching a staff-level agreement with the International Monetary Fund, including $1.0 billion (SDR 760 million) under the Extended Fund Facility (EFF) and $210 million (SDR 154 million) under the Resilience and Sustainability Facility (RSF).

The latest tranche would take total disbursements under both programs to roughly $4.5 billion, pending approval from the IMF Executive Board.

The agreement follows talks held in Karachi and Islamabad from February 25 to March 2, with discussions continuing virtually afterwards.

The IMF delegation was led by Iva Petrova, who confirmed the breakthrough at the conclusion of the review.

“The IMF team has reached a staff-level agreement with the Pakistani authorities on the third review under the 37-month EFF and the second review under the 28-month RSF,” Petrova said in a statement.

The development marked a critical step for Pakistan as it seeks to maintain macroeconomic stability and secure external financing amid ongoing fiscal and external pressures.

Approval by the IMF Executive Board will formalize the disbursement, providing a key buffer to the country’s foreign exchange reserves.

The EFF program focuses on structural reforms and fiscal consolidation, while the RSF is aimed at strengthening Pakistan’s resilience to climate-related risks and supporting sustainable growth initiatives.

Supported by the EFF, ongoing policies have continued to strengthen the economy and rebuild market confidence.

Following the recovery in FY25, economic activity gained further momentum in the first part of the current fiscal year. Inflation and the current account balance remained contained, and external buffers continued to strengthen.

The conflict in the Middle East, however, casts a cloud over the outlook as volatile energy prices and tighter global financial conditions risk putting upward pressure on inflation and weigh on growth and the current account.

The authorities remain committed to pursuing sound and prudent macroeconomic policies to preserve the recent gains in macro-financial stabilization, while deepening structural reforms to accelerate growth and strengthening social protection to mitigate the impact of volatile energy prices on the most vulnerable.

The authorities’ policy priorities include maintaining a prudent fiscal stance, advancing fiscal structural reforms, strengthening poverty reduction and social protection, maintaining an appropriately tight and data-dependent monetary policy, achieving energy sector viability, and building resilience to climate change. 

The authorities remain committed to ensuring a sustainable fiscal position and reducing the still high public debt burden to more moderate levels over the medium term.

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