The International Monetary Fund has reached a staff level agreement with Pakistan that could unlock approximately USD 1.21 billion in additional financing, marking another step in the country’s ongoing economic reform programme.
The agreement was reached following discussions between IMF officials and Pakistani authorities covering reviews of the country’s lending programmes. The proposed financing remains subject to approval by the IMF Executive Board. If approved, Pakistan would receive about USD 1 billion under the Extended Fund Facility and another USD 210 million through the Resilience and Sustainability Facility.
The latest agreement covers the fourth review of Pakistan’s 37 month Extended Fund Facility programme and the third review of its 28 month Resilience and Sustainability Facility arrangement, according to reports based on the IMF statement. An IMF team led by Iva Petrova held discussions with Pakistani officials in Karachi and Islamabad between September 23 and October 7.
The potential funding comes as Pakistan continues efforts to strengthen its economic position and rebuild financial buffers. The IMF said Pakistan has maintained macroeconomic stability despite the impact of the Middle East conflict and higher energy prices. The Fund also noted that stronger policies have helped the country manage external pressures and supply disruptions.
According to the IMF assessment reported after the latest discussions, Pakistan’s real gross domestic product growth reached around 4 percent during the first three quarters of fiscal year 2026. Full year growth for the period was estimated at about 3.6 percent.
Inflation has also shown some moderation from its earlier peak. Headline inflation was reported at approximately 10.3 percent in September after reaching a higher level in May. Core inflation remained relatively contained, according to the IMF assessment.
Pakistan’s external position has also improved in some areas. The IMF said the country’s current account was broadly balanced during fiscal year 2026, supported in part by strong remittance inflows. Gross foreign exchange reserves increased to approximately USD 21.5 billion by the end of September, providing a stronger external buffer than in earlier periods.
Despite these developments, the IMF has continued to highlight several risks facing the Pakistani economy. Geopolitical tensions remain an important concern because disruptions in international trade and energy markets can affect Pakistan’s import costs and external financing requirements.
Volatile energy prices are another major risk. Pakistan is dependent on imported energy, meaning a sustained increase in global oil and other energy prices could place additional pressure on inflation, the current account and government finances.
The IMF has also pointed to tighter global financial conditions as a potential challenge. Higher international interest rates and borrowing costs can make external financing more expensive for emerging economies, including Pakistan. Trade disruptions could add another layer of pressure if they affect exports, imports or supply chains.
Alongside the proposed financing, the IMF has outlined several policy priorities for Pakistan. One major focus is fiscal discipline. The Fund expects Pakistan to implement its fiscal year 2027 budget firmly and maintain an underlying primary surplus target of 2 percent of gross domestic product.
A primary surplus means government revenues exceed expenditure excluding interest payments. Maintaining such a surplus is intended to help put public debt on a sustainable downward path.
The IMF has also called for continued improvements in revenue collection and tax administration. Proposed priorities include risk based audits, greater use of digital invoicing and wider use of third party data. The Fund has also stressed the need for a simpler and fairer tax system.
Energy sector reforms remain another important part of Pakistan’s economic programme. The IMF has previously emphasised the need to improve the financial sustainability of the energy sector, address inefficiencies and prevent the accumulation of additional circular debt.
Structural reforms are also expected to remain part of the programme. These include improving governance, reducing inefficiencies, strengthening public sector institutions and creating conditions for greater private sector participation.
The IMF’s latest assessment comes after Pakistan received earlier financing under its current programmes. In May 2026, the IMF Executive Board completed the third review of the Extended Fund Facility and the second review of the Resilience and Sustainability Facility. That decision allowed Pakistan to draw approximately USD 1.1 billion under the EFF and around USD 220 million under the RSF, bringing total disbursements under the two arrangements to approximately USD 4.8 billion at that stage.
The latest staff level agreement could increase the total amount disbursed under the two programmes to around USD 5.7 billion if the IMF Executive Board approves the latest reviews. The agreement therefore represents an important potential source of external financing for Pakistan, although the funds cannot be treated as finally released until the Board completes its approval process.
The Resilience and Sustainability Facility is particularly linked to longer term reforms aimed at helping countries address climate related and structural vulnerabilities. Pakistan has previously committed to reforms involving climate resilience, energy policy and other areas under the facility.
For Pakistan, the latest IMF agreement provides additional financial support while also keeping attention focused on economic reforms. The country must continue managing inflation, public debt, energy sector pressures and external financing needs while attempting to maintain economic growth.
The IMF’s assessment suggests that Pakistan has made progress in stabilising several parts of its economy. However, the Fund’s warnings indicate that the recovery remains exposed to external shocks. Energy price movements, geopolitical developments and global financial conditions could affect the country’s economic performance in the coming months.
The proposed USD 1.21 billion financing should therefore be viewed as part of Pakistan’s wider IMF supported reform programme rather than as a standalone financial package. The agreement combines potential financial assistance with continued requirements for fiscal management, tax reforms, energy sector improvements and structural changes.
The next major step will be consideration by the IMF Executive Board. Until that approval is completed, the USD 1.21 billion remains potential financing rather than a completed disbursement.
Pakistan’s latest agreement with the IMF highlights the continuing importance of external financial support to the country’s economic stabilisation efforts. At the same time, the IMF’s assessment indicates that long term economic stability will depend on sustained reforms, stronger public finances and the ability to manage external risks.
