The International Monetary Fund (IMF) has reached a staff-level agreement with Pakistan on a new funding tranche valued at approximately $1.21 billion. This agreement, announced on Wednesday, covers the fourth review of Pakistan’s Extended Fund Facility (EFF) and the third review of the Resilience and Sustainability Facility (RSF). The deal remains subject to formal approval by the IMF Executive Board.
An IMF team led by Iva Petrova conducted discussions in Karachi and Islamabad between September 23 and October 7, simultaneously concluding the 2026 Article IV consultation. Under the agreement, Pakistan is set to receive about $1 billion from the EFF and roughly $210 million from the RSF. These disbursements will raise total funding under both programmes to around $5.7 billion.
The IMF noted that the country's economic programme remains broadly on track despite ongoing global uncertainties, including the conflict in the Middle East. Pakistan’s real gross domestic product (GDP) grew by 4 percent in the first three quarters of the fiscal year 2026, though higher energy costs reduced momentum, with full-year growth projected at 3.6 percent.
Inflation, which reached a peak earlier this year, has moderated to approximately 10.3 percent as of September. Meanwhile, the current account remained roughly balanced during the fiscal year, supported by strong remittance inflows. Pakistan’s gross foreign exchange reserves rose to about $21.5 billion by the end of September. The IMF highlighted that sovereign credit rating upgrades and renewed access to international capital markets have bolstered the economic outlook.
Despite these positive indicators, the IMF underscored ongoing risks to Pakistan’s economic stability. Key concerns include geopolitical tensions, fluctuating energy prices, tighter global financial conditions, and potential disruptions to trade. The fund stressed that Pakistan’s authorities remain committed to maintaining sound macroeconomic policies to safeguard stability amid this volatile environment.
As part of the agreement, the IMF has outlined several conditions for continued programme support. Islamabad is expected to maintain a fiscal framework targeting an underlying primary surplus of 2 percent of GDP in the fiscal year 2027 budget. Additional measures include strengthening tax administration through risk-based audits, implementing digital invoicing, employing third-party data verification, and adopting a medium-term tax reform strategy.
Pakistan has frequently turned to the IMF for financial assistance, with over 20 arrangements since 1958. The current engagement began with a $3 billion Stand-By Arrangement in July 2023, followed by a 37-month EFF arrangement worth $7 billion initiated in September 2024. The RSF, aimed at supporting resilience and sustainability, was added in 2025 with a commitment of around $1.4 billion over 28 months.