IMF's Executive Board approves $1.2 billion financing for Pakistan's reform programme

WASHINGTON: The International Monetary Fund’s (IMF) Executive Board on Friday approved the latest review of Pakistan’s reform programme, paving the way for the release of $1.2 billion in financing under the ongoing arrangements.

In Islamabad, Finance Minister Muhammad Aurangzeb also confirmed the approval following the Board meeting in Washington, saying the decision reflects Pakistan’s continued progress on difficult but necessary economic reforms.

The disbursement includes around $1 billion under the Extended Fund Facility (EFF) and approximately $210 million under the Resilience and Sustainability Facility (RSF). With this tranche, total disbursements under the current programme rise to about $4.5 billion.

The IMF said the approval comes after Pakistan successfully met key structural benchmarks, including tax policy measures and adjustments in energy pricing, aimed at strengthening fiscal discipline and improving macroeconomic stability.

Officials said the programme continues to focus on rebuilding foreign exchange reserves, containing inflationary pressures, and maintaining a tighter fiscal stance amid ongoing external and regional economic challenges.

According to programme details, Pakistan’s reform path going forward will emphasise sustaining a primary budget surplus of around 2 per cent of GDP, broadening the tax base, and improving compliance in previously under-taxed sectors, including retail and agriculture.

Authorities are also expected to pursue additional revenue measures to support a tax-to-GDP increase over the medium term.

Energy sector reforms remain central to the IMF framework, with commitments to regular and predictable tariff adjustments in electricity and gas to reduce circular debt and improve financial viability in the sector.

The programme also envisages continued restructuring and privatisation efforts involving selected state-owned enterprises, aimed at reducing fiscal burdens and improving efficiency.

Officials said the latest review is expected to help support Pakistan’s external position, with inflows contributing to a further strengthening of foreign exchange reserves in the coming weeks.

The IMF has also indicated that Pakistan will continue to maintain a tight, data-driven monetary policy stance to anchor inflation expectations and preserve macroeconomic stability.

Looking ahead, an IMF mission is scheduled to visit Islamabad on May 15 to engage with authorities on the next federal budget framework and review progress on structural reforms.

Analysts say the approval provides near-term stability for financial markets while reinforcing the government’s commitment to its reform agenda under the multi-year programme, which remains focused on long-term fiscal and external sustainability.