ISLAMABAD, May 10 – In a major step towards helping Pakistan recover its economy and prepare for future challenges, the International Monetary Fund (IMF) has approved a $1 billion disbursement under the Extended Fund Facility (EFF). In addition, the IMF granted a new support package worth about $1.4 billion under the Resilience and Sustainability Facility (RSF):
The decision came after the IMF Executive Board completed its first review of Pakistan’s ongoing reform program. With this latest approval, Pakistan has now received around $2.1 billion from the EFF, which began on September 25, 2024. The program is set to run for 37 months and focuses on building financial stability and supporting long-term economic growth.
The EFF’s key goals include strengthening the economy through responsible financial policies, expanding the tax system, and reforming state-owned enterprises (SOEs). It also seeks to boost productivity, improve public services, and ensure the energy sector becomes more sustainable.
So far, Pakistan has shown encouraging progress. In the first half of the fiscal year 2024–25, the government achieved a primary budget surplus of 2.0% of GDP. Inflation, which once posed a serious threat, dropped sharply to just 0.3% in April. Thanks to lower inflation and improved stability, the State Bank of Pakistan cut interest rates by 1100 basis points since June 2025. Meanwhile, foreign currency reserves rose to $10.3 billion by the end of April and are expected to reach $13.9 billion by June 2025.
The newly approved RSF program will help Pakistan face growing climate risks such as floods and droughts. It will focus on improving how the country invests in infrastructure, uses water resources, and prepares for natural disasters. The program will also encourage banks and businesses to be more open about climate-related risks and help Pakistan meet its international environmental goals.
Nigel Clarke, IMF Deputy Managing Director, praised Pakistan’s efforts, noting that the country had made “important progress” in stabilizing its economy despite tough conditions. He warned, however, that risks remain high due to global uncertainties and local economic weaknesses.
He urged Pakistan to keep following sound financial policies and to speed up reforms, especially in the energy sector and investment climate. He also emphasized the need to maintain a flexible exchange rate and keep inflation under control.
These steps, Clarke said, will protect the gains made so far and pave the way for a stronger, more sustainable economy that is better prepared for future challenges.
