IMF executive board approves $1.29 billion for Pakistan

WASHINGTON: The International Monetary Fund (IMF) Executive Board has approved $1.29 billion in new disbursements for Pakistan after completing its latest review of the country’s economic program.

According to the IMF statement, the Board approved $1.09 billion under Pakistan’s ongoing Extended Fund Facility (EFF), along with the first tranche of $200 million from the Resilience and Sustainability Facility (RSF), which supports climate adaptation and mitigation reforms.

This marks the third tranche of the EFF program, which Pakistan secured in September 2024 as a 37-month arrangement. The country received the first $1 billion tranche in September 2024, followed by another $1 billion disbursement in May 2025.

Following the Executive Board’s approval, the $1.29 billion is expected to be transferred to the State Bank of Pakistan within hours, boosting Pakistan’s foreign exchange reserves.

The IMF Board reviewed Pakistan’s progress during a meeting held in Washington, where officials assessed fiscal reforms, monetary policy steps, and structural measures introduced by Islamabad under the program.

The latest approval is expected to bolster Pakistan’s external financing position as the country continues efforts to stabilize its economy amid inflationary pressures and climate-related vulnerabilities.

IMF Urges Pakistan to Reform Tax System

Earlier, the International Monetary Fund (IMF) had called on Pakistan to simplify its tax system ahead of fiscal year 2026-27 budget.

The IMF has recommended that the strategy to simplify the tax system be implemented by May 2026.

The Fund suggested reducing tax exemptions provided to various sectors. The recommendations also include lowering special regimes, heavy withholding taxes, and advance taxes.

The IMF recommended limiting the powers of the Federal Board of Revenue (FBR) to create its own rules and suggested issuing an annual report on the progress of FBR’s implementation of these recommendations.

The Fund further recommended improving the organizational structure of the FBR, reducing the powers of FBR’s field offices, and enhancing accountability in FBR operations.