Pakistan reaches staff-level agreement with IMF to unlock $1.21 billion tranche

2026-03-28 - 03:40

WASHINGTON – The International Monetary Fund (IMF) 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 US$1.0 billion (SDR 760 million) under the EFF and about US$210 million (SDR 154 million) under the RSF, bringing total disbursements under the two arrangements to about US$4.5 billion,” read the official statement released by IMF on Saturday. The development comes after an IMF team, led by Iva Petrova, held discussions on the third review under EFF and the second review under the RSF in Karachi and Islamabad from February 25 to March 2, 2026, and virtually afterward. At the conclusion of the discussions, Petrova said: “Supported by the EFF, ongoing policies have continued to strengthen the economy and rebuild market confidence. Following the recovery in FY25, economic activity gained further momentum in the first part of the current fiscal year. Inflation and the current 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”. She said the Pakistani authorities remain committed to pursuing sound and prudent macroeconomic policies to preserve the recent gains in macro-financial stabilization, while deepening structural reforms to accelerate growth and strengthening social protection to mitigate the impact of volatile energy prices on the most vulnerable. The authorities’ policy priorities include maintaining a prudent fiscal stance. The authorities remain committed to ensuring a sustainable fiscal position and reducing the still high public debt burden to more moderate levels over the medium term. To this end, efforts are ongoing to meeting the FY26 budget primary surplus of 1.6 percent of GDP and to target an underlying primary balance of 2 percent of GDP in FY27, supported by measures to broaden the tax base and strengthen expenditure discipline, while expanding health, education, and social protection spending, and strengthening federal‐provincial burden‐sharing. The other priorities include advancing fiscal structural reforms, strengthening poverty reduction and social protection, maintaining an appropriately tight and data-dependent monetary policy, Deepening structural reforms and Building resilience to climate change.