IMF praises Pakistan's economic and energy reforms
- By Shoaib Nizami -
- Dec 09, 2025
WASHINGTON: The International Monetary Fund (IMF) Executive Board has released its official statement following approval of $1.2 billion for Pakistan under its dual-track bailout, the 37-month Extended Fund Facility (EFF) and the climate-focused Resilience and Sustainability Facility (RSF).
The decision came on Monday, after the IMF Executive Board convened in Washington.
According to the IMF, the Executive Board has approved $1.2 billion for Pakistan, which will be transferred immediately. The statement notes that Pakistan implemented economic and energy sector reforms on time.
The IMF said Pakistan continued to adhere strictly to the programme despite the devastating floods. It added that the country managed external pressures, achieved economic stability, improved production and competitiveness, and met its climate-related targets under the RSF programme.
The Fund recalled that Pakistan secured its current 37-month loan programme in September 2024. Under this programme, reforms were undertaken that strengthened the economy.
The IMF said the programme helped improve foreign exchange reserves, increased tax revenue, and raised the tax-to-GDP ratio. Reforms in state-owned enterprises also improved their performance.
According to the IMF, energy costs in Pakistan have come down, keeping the sector viable, while the primary balance recorded a 1.3 percent surplus in fiscal year 2025. Inflation rose due to the floods but was temporary.
The State Bank’s reserves increased from $9.4 billion to $14.5 billion, and further improvement is expected by the end of the current fiscal year.
The IMF also confirmed that Pakistan has been granted an RSF programme related to climate resilience. The 28-month Resilience and Sustainability Facility is aimed at reducing climate-related risks, improving coordination between federal and provincial governments during floods, and enabling timely data collection and reporting on flood damages.
The IMF’s Deputy Director Nigel Chalk said Pakistan has achieved economic stability under the loan programme. He added that economic growth has improved, while the fiscal and current account deficits have been brought under control. However, Pakistan must continue implementing economic reforms, he stressed.
Chalk noted that Pakistan remained committed to meeting its primary balance target despite the floods and continued with tax reforms. He said inflation is under control due to tight monetary policy, and the State Bank has met its inflation target. He added that the central bank is expected to continue efforts to manage exchange-rate volatility.
According to Chalk, Pakistan’s capital markets will grow, private-sector lending will expand, and the country must continue strict implementation of energy reforms. Timely tariff decisions have helped manage circular debt, but Pakistan must further reduce power costs and losses.
The IMF also said Pakistan needs to address cost-escalating factors in the gas sector and accelerate structural reforms to attract investment. Chalk added that the pace of privatisation must increase and that Pakistan needs to improve its economic data collection system.