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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

Ayesha Mir

ISLAMABAD: Pakistan is fully prepared for the upcoming review by the International Monetary Fund and is confident about its economic trajectory, Finance Minister Muhammad Aurangzeb said.&nbsp;Speaking to Pakistan TV Digital, Aurangzeb confirmed that the IMF mission has begun its technical discussions in Karachi and that he will meet the team in Islamabad on Monday for the third review under Pakistan&rsquo;s ongoing program.&nbsp;&ldquo;We are getting ready for the third review,&rdquo; Aurangzeb said. &ldquo;It will cover both performance benchmarks and structural benchmarks, as well as a forward-looking assessment of the program.&rdquo;&nbsp;He added that Pakistan is entering the review from a position of strength. &ldquo;It is premature to say how it will go,&rdquo; he said. &ldquo;But I would say we are well-positioned for this review.&rdquo;&nbsp;Strong economic fundamentalsAurangzeb highlighted the country&rsquo;s consolidation of macroeconomic stability over the past two years. Consecutive primary fiscal surpluses, a stable currency, easing inflation, and rising foreign exchange reserves reflect these gains, he said.&nbsp;Inflation has fallen into single digits, allowing the policy rate to drop to 10.5%, while reserves have grown from roughly two weeks of import cover in July 2023 to about 2.5 months.&nbsp;&ldquo;If the current trajectory continues, we expect to reach the international benchmark of three months of import cover by year-end,&rdquo; he said.&nbsp;Remittances rose to $38 billion last fiscal year and are projected to reach around $42 billion this year. IT exports are also strengthening, expected to reach $4 billion to $5 billion, alongside traditional export sectors.&nbsp;From aid-led to investment-led growthAurangzeb emphasized that Pakistan is shifting from an aid-led model to a trade and investment-focused approach, targeting business-to-business engagement with international partners.&nbsp;&ldquo;We are very focused on sectors like oil and gas, minerals, mining and IT to attract further trade and investment,&rdquo; he said.&nbsp;He noted recent diplomatic and economic initiatives, including CPEC Phase 2.0 with China and strengthened ties with GCC countries and the United States. Tariff negotiations with the US have reduced Pakistan&rsquo;s trade duties, further supporting competitive exports.&nbsp;Reform and continuityThe finance minister outlined ongoing reforms to strengthen fiscal sustainability.&nbsp;These include modernization of the Federal Board of Revenue, pension restructuring, government right-sizing, privatization of select state assets and enhanced debt management, which saved about Rs850 billion last year.&nbsp;&ldquo;We are focused on continuity, credibility, and reform,&rdquo; Aurangzeb said. &ldquo;Our engagement with the IMF is part of a broader strategy to ensure lasting stability, sustainable growth, and increased private-sector investment for Pakistan.&rdquo;&nbsp;The IMF mission will also examine governance reforms, electricity tariff adjustments, and the FY2026-27 federal budget framework. Completion of the review is expected to unlock $1.2 billion in funding, reinforcing Pakistan&rsquo;s recovery and reform momentum.

Federal Minister for Finance Muhammad Aurangzeb speaks with Pakistan TV Digital ahead of the IMF review mission. (Pakistan TV Digital)

Pakistan is well-prepared for IMF reviews this week, Muhammad Aurangzeb said, with $1.2 billion funding pending. Officials report program targets on track, including fiscal, monetary, and governance benchmarks.

Articles tagged with "International Monetary Fund (IMF)"

IMF clears $1.2 billion for Pakistan in dual program review

Pakistan confident ahead of IMF review, eyes investment-led growth