ISLAMABAD (Kashmir English): The International Monetary Fund (IMF) on Friday announced that it had reached a staff-level agreement with Pakistan for the disbursement of about $1.2 billion tranche under the Extended Fund Facility and Resilience and Sustainability Facility.
In a statement, the IMF mission chief Iva Petrova said that a staff-level agreement was reached on the third review of the 37-month Extended Arrangement under the Extended Fund Facility (EFF) and the second review of the 28-month arrangement under the Resilience and Sustainability Facility (RSF).
It added that the staff-level agreement is subject to approval by the IMF Executive Board.
With an approval, Petrova said, Pakistan will have access to “about US$1.0 billion (SDR 760 million) under the EFF and about US$210 million (SDR 154 million) under the RSF, bringing total disbursements under the two arrangements to about US$4.5 billion.”
An IMF team, led by Iva Petrova, held talks with Pakistani officials in Karachi and Islamabad from February 25 to March 2, 2026, and virtually afterward.
“Supported by the EFF, ongoing policies have continued to strengthen the economy and rebuild market confidence,” the Fund said in a statement.
It added that economic activity had gained momentum, inflation and the current account had remained contained, and external buffers had continued to strengthen, although the conflict in the Middle East had clouded the outlook by raising the risk of volatile energy prices, tighter global financial conditions, higher inflation, and pressure on growth and the external account.
Pakistan govt’s policy prorities
In its today’s statement, the IMF said the authorities’ policy priorities include maintaining a prudent fiscal stance, broadening the tax base, strengthening expenditure discipline, expanding health, education and social protection spending, and improving federal-provincial burden-sharing.
The Fund said revenue mobilisation efforts were already yielding results, with the FBR pursuing priority actions under its transformation plan, including stronger taxpayer audits, wider use of digital invoicing and production monitoring, and improved internal governance. It 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 an appropriately tight and data-dependent monetary policy and stand ready to raise interest rates if price pressures intensify, including from swings in global food and fuel prices.
It added that exchange-rate flexibility should remain the primary shock absorber against external spillovers, including those stemming from the Middle East conflict.
On the energy side, the Fund said, “Sustainability must be maintained through timely tariff adjustments that ensure cost recovery,” while untargeted energy subsidies should be avoided.
It also pointed to structural reforms aimed at reducing circular debt, improving transmission and distribution, privatising inefficient generation companies, completing the transition to a competitive electricity market, and facilitating the shift towards renewable energy.
The IMF further said the authorities remained committed to strengthening the Benazir Income Support Programme (BISP) through inflation-adjusted cash transfers, wider beneficiary coverage and improved payment systems to protect vulnerable households from food and fuel price volatility.
It also highlighted broader reform goals, including SOE reform, privatisation, anti-corruption efforts and climate resilience measures under the RSF.
