Pakistan and the International Monetary Fund (IMF) have reached a staff-level agreement. The deal covers the latest reviews of Pakistan’s economic programme. The agreement could allow Pakistan to receive about $1.2 billion from the IMF. The funds remain subject to approval by the IMF Executive Board. The agreement covers the fourth review of the $7 billion Extended Fund Facility (EFF). It also covers the third review under the $1.4 billion Resilience and Sustainability Facility (RSF). Under the proposed disbursement, Pakistan could receive around $1 billion under the EFF. Another $210 million could come under the RSF.
The IMF said the latest agreement followed talks held in Pakistan. An IMF team led by Iva Petrova visited the country from September 23 to October 7. The team reviewed economic developments and the implementation of key reforms. It also held discussions under the 2026 Article IV consultation. The IMF said Pakistan’s economic programme remained broadly on track. It noted progress despite a challenging external environment. Pakistan’s real GDP growth reached 4 percent during the first three quarters of FY26. The IMF expects full-year growth at around 3.6 percent.
Inflation also showed signs of moderation. Headline inflation fell to around 10.3 percent in September. It had reached a higher level in May. The IMF also highlighted improvements in Pakistan’s external position. The current account remained broadly balanced during FY26. Strong remittances supported the external account. Foreign exchange reserves also increased to around $21.5 billion by September-end.
However, the IMF warned that risks remain high. These risks include geopolitical tensions and volatile energy prices. Tighter global financial conditions could also affect Pakistan’s economy. Trade disruptions remain another potential challenge. The IMF stressed the need for strong fiscal policies. It said Pakistan must implement the FY27 budget effectively.
The fund also called for stronger tax administration. Digital invoicing, risk-based audits and third-party data could support revenue collection. Pakistan must also continue reforms in public financial management. These reforms aim to improve budget transparency and spending efficiency. The IMF also urged Pakistan to strengthen social protection. The authorities plan to increase spending on health and education. The fund said targeted cash transfers could help vulnerable households. It also called for better coverage and payment systems.
Energy sector reforms remain another major priority. The IMF called for timely tariff adjustments and lower sector costs. It also urged reforms to prevent another rise in circular debt. The measures include improving electricity sector efficiency and reducing gas losses. The IMF further stressed the importance of monetary policy. It asked the State Bank of Pakistan to maintain an appropriately tight stance. The goal is to bring inflation back into the central bank’s target range. The IMF also supported continued exchange rate flexibility. The Pakistan-IMF reach staff-level agreement for $1.2bn tranche comes after several earlier reviews under the programme. Previous agreements also unlocked billions of dollars for Pakistan.
The latest agreement would bring total disbursements under the EFF and RSF arrangements to about $5.7 billion. However, Pakistan must still wait for formal approval from the IMF Executive Board.
IMF talks also highlighted a major update on the mini-budget and new taxes.