Pakistan to get $1.2 billion as IMF, Islamabad reach staff-level agreement after month-long review

The International Monetary Fund and Pakistan have reached a staff-level agreement under which the fund will disburse approximately $1.2 billion to Islamabad in funding, the organisation said on Saturday.

The agreement is part of Pakistan's loan programme, which was floated after the country faced a severe economic crisis.

In a statement, the IMF said that the two sides successfully concluded the third review of the Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF).

The agreement requires the approval of IMF's board, following which Pakistan can access $1 billion under the Extended Fund Facility and $210 million under the Resilience and Sustainability Facility.

The total disbursements under the ongoing loan programme of Pakistan will come up to $4.5 billion.

What did the IMF say?

Earlier between 25 February and 2 March, the IMF mission held talks with Pakistani officials in Karachi and Islamabad but left without an agreement. The talks were continued online after that, following which an agreement was reached.

“The IMF team has reached a staff-level agreement with the Pakistani authorities on the third review of the 37-month Extended Arrangement under the Extended Fund Facility (EFF) and the second review of the 28-month arrangement under the Resilience and Sustainability Facility (RSF). The staff-level agreement is subject to approval by the IMF Executive Board. Upon approval, Pakistan will have access to about $1.0 billion (SDR 760 million) under the EFF and about $210 million (SDR 154 million) under the RSF, bringing total disbursements under the two arrangements to about $4.5 billion,” said IMF mission chief Iva Petrova in a statement.

The IMF however warned of the US-Iran was, saying that it could be a hindrance in Pakistan's economic development.

“Account balance remained contained, and external buffers continued to strengthen. The conflict in the Middle East, however, casts a cloud over the outlook as volatile energy prices and tighter global financial conditions risk putting upward pressure on inflation and weigh on growth and the current account,” Petrova said in her statement.

To mitigate the effect, the IMF suggested flexibility in Pakistan's exchange rate.

“Exchange rate flexibility should continue to serve as the primary shock absorber, including against spillovers from the conflict in the Middle East, while the SBP should ensure that the banking system remains able to accommodate import financing and other external payments amid potentially elevated balance of payments pressures,” it said.

Petrova noted Pakistan authorities remain committed to pursuing sound and prudent macroeconomic policies to preserve the recent gains in macro-financial stabilisation.

“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),” Pakistan's Ministry of Finance said on X.

Pakistan joined the IMF's EFF programme of $7 billion in 2024, which focuses on strengthening the economy, rebuilding market confidence, sustaining fiscal reforms, and reducing energy sector inefficiencies.

Last year, Pakistan got a Resilience and Sustainability Facility (RSF) facility worth $1.4 billion, aiming to build climate resilience, strengthen disaster management, improve water efficiency, and bolster green financing.