The government of Pakistan and the International Monetary Fund (IMF) have reached a staff-level agreement on the second review under the Extended Fund Facility (EFF) and the first review under the Resilience and Sustainability Facility (RSF), unlocking a potential $1.2 billion in funding.
Strong Policy Implementation and Economic Recovery
In its statement, the IMF praised Pakistan’s continued commitment to fiscal discipline, inflation control, and structural reforms.
“The authorities are committed to sustaining the fiscal effort to strengthen public finances while providing needed support to the victims of recent floods; ensuring inflation remains within the State Bank’s target range; restoring the viability of the energy sector; and advancing structural reforms,” the IMF noted.
The Fund emphasized that Pakistan’s EFF-supported program has been implemented strongly, helping to stabilize the economy after years of financial turbulence.
Positive Market Reaction and Government Response
The announcement sparked a wave of optimism across Pakistan’s financial markets. The Pakistan Stock Exchange (PSX) surged nearly 2,000 points, reflecting renewed investor confidence.
Prime Minister Shehbaz Sharif welcomed the development, describing it as a “reflection of Pakistan’s improved macroeconomic indicators and growing global confidence in the country’s economic stability.”
Finance Minister Muhammad Aurangzeb added that the agreement showcases Pakistan’s efforts to “anchor growth through stability, fiscal responsibility, and energy reform.”
Climate Resilience and Long-Term Goals
The IMF also highlighted Pakistan’s progress on climate reform under the RSF framework. The Fund noted that the recent devastating floods, which affected nearly seven million people and caused over 1,000 fatalities, underscore Pakistan’s high vulnerability to climate-related risks.
It emphasized that comprehensive climate resilience policies and infrastructure investments are essential to protect Pakistan’s economy and population from future disasters.
Economic Outlook
According to IMF projections, Pakistan’s recovery remains on track, with the FY25 current account showing a surplus for the first time in 14 years, inflation under control, and external reserves strengthening. However, the impact of floods is expected to slightly lower FY26 GDP growth to around 3.25%–3.5%.
“The authorities reaffirmed their commitment to the EFF- and RSF-supported programs and to maintaining prudent macroeconomic policies while advancing ongoing structural reforms,” the IMF concluded.
