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ISLAMABAD: The International Monetary Fund (IMF) reached a staff-level agreement with Pakistan on Thursday, unlocking roughly $1.2 billion in financing pending board approval, the international financial institute said Friday. According to a statement released by IMF Communications Department, the agreement concludes the third review of a 37-month Extended Fund Facility and the second review of a 28-month Resilience and Sustainability Facility arrangement. Pakistan would draw approximately $1 billion from the EFF and $210 million from the RSF once the board signs off. Cumulative payouts across both programs would then stand at around $4.5 billion. <div class="fr-embed"><div class="twitter-tweet twitter-tweet-rendered" style="display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;"><iframe id="twitter-widget-0" scrolling="no" frameborder="0" allowfullscreen="true" style="position: absolute; visibility: hidden; width: 0px; height: 0px; display: block; flex-grow: 1;" title="X Post" src="https://platform.twitter.com/embed/Tweet.html?dnt=false&embedId=twitter-widget-0&features=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%3D%3D&frame=false&hideCard=false&hideThread=false&id=2037723932879716834&lang=en&origin=https%3A%2F%2Fmain.d1wrm1qseko1cp.amplifyapp.com%2Farticles%2F4953%2F&sessionId=e1b7b50440a792e14968d3461c374ec3c99eddd9&theme=light&widgetsVersion=2615f7e52b7e0%3A1702314776716&width=550px"></iframe></div><blockquote class="twitter-tweet">IMF Reaches Staff-Level Agreement on the Third Review for the 37-month Extended Arrangement under the Extended Fund Facility (EFF) and the Second Review for 28-month Arrangement Under the Resilience and Sustainability Facility (RSF) &ndash; Pakistan <a href="https://t.co/hYPsALIpbn" style="color: rgb(0, 115, 230);">https://t.co/hYPsALIpbn</a>&mdash; Ministry of Finance, Government of Pakistan (@Financegovpk) <a href="https://twitter.com/Financegovpk/status/2037723932879716834?ref_src=twsrc%5Etfw" style="color: rgb(0, 115, 230);">March 28, 2026</a></blockquote></div> The deal remains subject to approval by the Fund&#39;s Executive Board. Iva Petrova led the IMF delegation during in-person talks with Pakistani officials in Karachi and Islamabad from Feb. 25 to March 2. Discussions continued remotely in the weeks that followed. The Fund described Pakistan&#39;s near-term economic outlook as improving. Output picked up pace in the first part of the current fiscal year, following a broader rebound in FY25. Price pressures and the trade balance have stayed manageable, and the country&#39;s foreign reserve position has continued to recover, the IMF noted. The Fund warned that ongoing conflict in the Middle East poses the most immediate threat to that trajectory. Swings in global energy costs and tightening international financing conditions could reignite inflation and drag on output. According to the IMF, Pakistan&#39;s fiscal targets call for a primary surplus of 1.6% of GDP in FY26, rising to an underlying primary balance of 2% of GDP in FY27. Hitting those marks will require widening the revenue base and tightening control over public spending. The Fund said health, education, and social assistance allocations are also set to increase. The country&rsquo;s Federal Board of Revenue (FBR) has launched an internal overhaul to improve tax collection and enforcement. Changes underway include tougher audit procedures, a broader rollout of electronic invoicing, and closer monitoring of production activity. A newly created Tax Policy Office has been tasked with drafting a longer-term reform roadmap aimed at keeping the policy environment stable without sacrificing revenue. Similarly, the State Bank of Pakistan (SBP) has signaled it will hold policy rates at elevated levels for as long as needed to keep inflation within its official band. The IMF said the local currency should be allowed to move freely in response to external pressures. A market-determined exchange rate, the Fund said, remains the country&#39;s first line of defense against balance of payments stress,&nbsp;particularly given potential fallout from the Middle East conflict. Pakistan&#39;s power sector remains a central focus of the program. Authorities have committed to closing the gap between the actual cost of electricity and what consumers are charged. The IMF said this structural imbalance is the root cause of the country&#39;s persistent circular debt problem. The Fund reported that Pakistan authorities are also working to strengthen the Benazir Income Support Program, the country&rsquo;s flagship federal social safety net. Measures include inflation-adjusted cash transfers, expanded coverage, and improved payment systems. Under the RSF, Pakistan has moved ahead on reducing transport-related emissions and building regulatory infrastructure to track and manage climate-related financial risks. Upcoming commitments include reinforcing water infrastructure, improving accounting for climate-relevant public expenditure, and establishing a formal framework for financing disaster response.

A view of the International Monetary Fund headquarters building in Washington, DC on October 20, 2024 ahead of the 2024 IMF/World Bank Annual Meetings. (AFP)

Economy

The deal remains subject to approval by the Fund's Executive Board.

IMF clears $1.2 billion for Pakistan in dual program review

ISLAMABAD: Pakistan&rsquo;s finance ministry has clarified that the structural benchmarks recently highlighted under Pakistan&rsquo;s IMF Extended Fund Facility (EFF) are part of a phased, medium-term reform agenda previously agreed with the Fund, and do not constitute new or abrupt conditions.&nbsp;In a statement on Sunday, the ministry said the measures build on reforms already initiated by the government and are implemented in a sequenced, step-by-step manner to achieve the program&rsquo;s policy objectives. It emphasized that the Memorandum of Economic and Financial Policies (MEFP) finalized after the EFF&rsquo;s Second Review supplements the earlier MEFP, ensuring continuity and deepening of Pakistan&rsquo;s reform agenda.&nbsp;According to the statement, the benchmarks cover multiple sectors, including fiscal management, governance, financial markets, state-owned enterprises, energy, trade, and corporate regulation.&nbsp;Key measures include enhancing the transparency of civil servants&rsquo; asset declarations, strengthening the operational effectiveness of the National Accountability Bureau, empowering provincial anti-corruption bodies with access to financial intelligence, and improving remittance flows by addressing bottlenecks in cross-border payments.&nbsp;The ministry also highlighted reforms in financial markets, including a comprehensive study of the local currency bond market to broaden the investor base, as well as a reform roadmap for the Federal Board of Revenue, operationalization of the Tax Policy Office, and preparation of a medium-term (3-5 year) tax strategy to enhance revenue predictability and administration.&nbsp;On energy and state-owned enterprises, it cited the ongoing privatization of selected power distribution companies, preconditions for private-sector participation in HESCO and SEPCO, and the signing of Public Service Obligation (PSO) agreements with major entities.&nbsp;In trade and commodity markets, deregulation of the sugar sector aims to reduce price distortions and liberalize operations. At the same time, corporate and regulatory reforms seek to strengthen governance, compliance for unlisted firms, and efficiency in special economic zones. Contingency measures, including a Federal Excise Duty on fertilizer and pesticides, remain part of the program framework.&nbsp;The ministry noted that the IMF&rsquo;s Second Review report confirmed eight of 13 prior benchmarks had been met, including approval of the FY26 budget in line with program targets, implementation of the new agricultural income tax, and amendments to improve asset disclosures. Some benchmarks were delayed due to ongoing reforms and recent floods, and the authorities have requested that their deadlines be reset while emphasizing that overall progress remains on track.&nbsp;The finance ministry concluded that the phased approach ensures reforms are sustainable, sequenced, and aligned with Pakistan&rsquo;s medium-term economic priorities, reiterating that the EFF&rsquo;s structural benchmarks support the government&rsquo;s own reform agenda rather than imposing externally driven conditions.

 The benchmarks cover multiple sectors, including fiscal management, governance, financial markets, state-owned enterprises, energy, trade, and corporate regulation.

Articles tagged with "IMF and Pakistan"

IMF clears $1.2 billion for Pakistan in dual program review

Pakistan says IMF benchmarks part of ongoing reform agenda

IMF clears $1.2 billion for Pakistan in dual program review