The International Monetary Fund (IMF) on Friday approved the immediate disbursement of approximately $1 billion to Pakistan under its ongoing Extended Fund Facility (EFF), according to a statement from the Prime Minister’s Office (PMO). This approval marks a significant step toward bolstering Pakistan’s economic stability amid ongoing reforms.
Prime Minister Shehbaz Sharif expressed satisfaction with the IMF’s approval of the $1 billion installment, emphasizing that the move not only reflects improved economic indicators but also underscores the failure of external attempts to derail the country’s development. The PMO’s statement highlighted Sharif’s response to India’s attempts to undermine Pakistan’s progress, asserting that “India’s high-handed tactics” to sabotage Pakistan’s relationship with the IMF had failed.
“The country’s economic situation has improved, and Pakistan is moving towards development,” the statement quoted the prime minister as saying. “India is plotting a conspiracy to divert attention from our country’s development through unilateral aggression. International institutions have responsibly rejected India’s false propaganda.”
Sharif emphasized that the successful disbursement would help stabilize the economy and pave the way for long-term recovery, with key reforms focusing on tax policy, energy sector improvements, and fostering private sector development. The government’s actions, he noted, had led to “improved economic indicators” over the past 14 months.
With the approval of the IMF’s executive board, the total disbursement under the $7 billion aid package now amounts to approximately $2 billion. This funding is part of a broader three-year agreement struck between Pakistan and the IMF in July. The agreement is intended to solidify macroeconomic stability and foster conditions for more resilient and inclusive growth in the country.
Under the loan program, Pakistan is set to receive seven equal disbursements of $1 billion (SDR 760 million) following successful reviews every six months. The first biannual review, which occurred in March 2025, saw an agreement on critical reforms, including the introduction of a carbon levy, electricity tariff adjustments, water price increases, and the liberalization of the automobile sector.
In addition to the $7 billion package, Pakistan will benefit from a new 28-month Resilience and Sustainability Facility (RSF) arrangement, granting access to approximately $1.3 billion (1 billion SDRs). This additional funding, unlike the regular disbursements, is contingent on the completion of specific projects designed to enhance climate resilience.
Looking ahead, the IMF mission will visit Pakistan in the coming weeks to finalize the 2025-26 national budget, which is expected to be presented in the National Assembly in early June. The government’s fiscal consolidation strategy will remain a priority in the new budget, with continued reductions in energy subsidies and tight controls on development spending.
