IMF Clears Way for USD 1.2 Billion Tranche to Pakistan, Board Approval Pending

The IMF deal covers reviews of two programmes and calls for a prompt phase-out of Pakistan's fuel support scheme

October 8, 2026

IMF says Pakistan preserved macroeconomic stability despite West Asia conflict pressures, estimating 3.6% growth in FY26

Pakistan, IMF Reach Staff-Level Agreement to Unlock $1.2 Billion in Funding

The International Monetary Fund and Pakistan have reached a staff-level agreement that could unlock about $1.2 billion in financing, the IMF said, as Islamabad continues to navigate energy-price pressures linked to the Middle East conflict. The deal remains subject to approval by the IMF’s Executive Board.

The agreement was reached on October 7 after talks between an IMF mission led by Iva Petrova and Pakistani authorities in Karachi and Islamabad, held from September 23 to October 7. It covers the fourth review of Pakistan’s 37-month, $7 billion Extended Fund Facility (EFF) and the third review of its 28-month, $1.4 billion Resilience and Sustainability Facility (RSF). The mission also concluded the 2026 Article IV consultation.

What the funding involves

Once approved by the board, Pakistan would gain access to about $1 billion (SDR 760 million) under the EFF and about $210 million (SDR 154 million) under the RSF, which supports climate-related reforms. Disbursements under the two arrangements would then total roughly $5.7 billion.

In her statement, Petrova said Pakistan had successfully navigated the impact of the West Asia conflict with the support of the EFF, and that strong policies had helped preserve macroeconomic stability. The IMF estimated economic growth at 3.6 per cent in fiscal year 2026 and said the State Bank of Pakistan should maintain an appropriately tight monetary stance so that inflation returns durably to its target range. The additional financing is expected to help strengthen Pakistan’s foreign exchange buffers.

Conditions and commitments

A key commitment under the agreement is the prompt phase-out of Pakistan’s fuel support scheme. The IMF also welcomed Islamabad’s efforts to raise spending on health and education, and reports say Pakistan has committed to subsidy reforms, higher social spending and stronger governance of state-owned enterprises. Finance Secretary Imdad Ullah Bosal and IMF Resident Representative Mahir Binici attended the concluding meeting.

Risks remain

The IMF’s assessment noted that the outlook remains vulnerable to external shocks. Pakistan is particularly exposed to disruption in Gulf energy supplies, since much of its energy imports transit the Strait of Hormuz. Further news is expected when the Executive Board votes on the agreement, which will determine when the funds are released.

For all the latest updates, download PGurus App.