IMF, Pakistan reach staff-level agreement unlocking $1.2bn tranche

WDWeb DeskPublished 28 March 2026 at 12:15 PKT3 min read

The International Monetary Fund (IMF) has announced a staff-level agreement (SLA) with Pakistan for the release of approximately $1.2 billion, following the successful completion of the third review under the Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF).

According to the IMF, the agreement remains subject to approval by its Executive Board. Once approved, Pakistan will gain access to around $1.0 billion under the EFF and $210 million under the RSF, bringing total disbursements under both programmes to about $4.5 billion.

Economic Progress and Key Developments

The IMF noted that Pakistan’s programme implementation has remained broadly on track, with progress seen in:

Strengthening public finances
Keeping inflation within the target range of the State Bank of Pakistan
Advancing energy sector reforms
Implementing structural reforms to support economic stability

The Fund also acknowledged that economic activity has gained momentum following recovery in FY25, while inflation and the current account have remained relatively contained. External financial buffers have also improved.

However, the IMF warned that ongoing tensions in the Middle East could pose risks through volatile energy prices and tighter global financial conditions.

Fiscal Discipline and Reform Agenda

Pakistan has reaffirmed its commitment to maintaining a prudent fiscal policy aimed at reducing public debt and ensuring long-term sustainability.

Key fiscal targets include:

Achieving a primary surplus of 1.6% of GDP in FY26
Moving towards a 2% surplus in FY27

Efforts are underway to broaden the tax base and improve expenditure management, while also increasing spending on health, education, and social protection.

The Federal Board of Revenue (FBR) is implementing reforms to improve revenue collection, including:

Strengthening tax audits
Expanding digital invoicing systems
Enhancing internal governance

A newly established Tax Policy Office is also working on a medium-term strategy to ensure tax stability and efficiency.

Social Protection and Public Welfare

To shield vulnerable populations from rising food and fuel prices, the government is strengthening the Benazir Income Support Programme (BISP) through:

Inflation-adjusted cash transfers
Expanded beneficiary coverage
Improved payment systems

Additionally, both federal and provincial governments are increasing investments in health and education to support inclusive growth.

Monetary Policy and Exchange Rate

The IMF emphasized the importance of maintaining an appropriate monetary policy, with the State Bank prepared to raise interest rates if inflationary pressures intensify.

Exchange rate flexibility will continue to act as a key buffer against external shocks, particularly those arising from global uncertainties and regional conflicts.

Energy Sector Reforms

A major focus remains on improving the financial viability of Pakistan’s energy sector and preventing the buildup of circular debt.

The IMF stressed:

Timely tariff adjustments to ensure cost recovery
Avoidance of untargeted subsidies
Improvements in transmission and distribution systems
Privatisation of inefficient power generation units

The government is also working towards transitioning to a competitive electricity market and increasing reliance on renewable energy sources.

Structural Reforms and Privatization

Pakistan is continuing efforts to implement broad structural reforms aimed at:

Strengthening governance
Reducing regulatory barriers
Boosting productivity
Encouraging private sector growth

Reforms of state-owned enterprises (SOEs) and the privatisation agenda remain central to improving service delivery and reducing the government’s economic footprint.