IMF, Pakistan reach staff-level agreement for $1.2 billion tranche under EFF

WASHINGTON: The International Monetary Fund (IMF) and Pakistan have reached staff-level agreement under which the international lender will provide an additional $1.2 billion to the country.

According to the official statement, the IMF has approved a $1 billion tranche under the ongoing 37-month loan program, along with $200 million for climate resilience initiatives.

The statement noted that Pakistan successfully met stringent economic targets, satisfying the IMF mission that stayed in the country from September 24 to October 8.

Further discussions continued even after the mission’s departure, resulting in a successful conclusion.

“Pakistan demonstrated a 1.6% primary surplus despite the impact of floods and continued implementation of tax reforms. An action plan has been prepared to address any tax shortfalls, while the federal and provincial governments will jointly allocate funds for flood relief efforts.”

The IMF acknowledged Pakistan’s success in achieving social sector goals, including an increase in Benazir Income Support Programme (BISP) allocations to alleviate poverty. Timely measures were also taken at both federal and provincial levels for education and public health.

The statement highlighted that Pakistan’s fiscal deficit is now at its best level in 14 years, reflecting effective economic reforms and tax policy measures.

The establishment of a separate Tax Policy Office marks another step toward reducing reliance on temporary revenue actions.

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According to the IMF, the State Bank of Pakistan remains committed to maintaining a tight monetary policy to contain inflation within 5–7%. Efforts continue to stabilize foreign exchange reserves and strengthen the economy’s capacity to manage external payment pressures.

In the energy sector, Pakistan has pledged to reduce circular debt, ensure timely cost recovery, and pursue privatization targets to enhance distribution company performance and reduce public enterprise losses.

The IMF also called for reduced government intervention in the agriculture sector, enhanced food security, and readiness for global competition. Under the new tariff policy, Pakistan must promote international trade and adhere to its 28-month RSS program for climate commitments.

The country has also been urged to achieve emission reduction goals in the transport sector, improve water resource management, and implement energy-related climate reforms.

Concluding the statement, the IMF mission expressed sympathy over recent flood damages in Pakistan and appreciation for the country’s hospitality during the mission’s stay.