The International Monetary Fund has reached a staff-level agreement with Pakistani authorities. It clears the way for roughly $1.2 billion in new financing once its Executive Board signs off.
The deal covers the fourth review of Pakistan’s 37-month Extended Fund Facility (EFF). It also covers the third review of its 28-month Resilience and Sustainability Facility (RSF), The Nation reported.
What Pakistan could receive
If the Executive Board approves the agreement, Pakistan will get access to about $1.0 billion (SDR 760 million) under the EFF. It will also get about $210 million (SDR 154 million) under the RSF.
That would bring total disbursements under the two arrangements to about $5.7 billion.
An IMF team led by Iva Petrova held talks in Karachi and Islamabad from September 23 to October 7, 2026. The discussions also covered the 2026 Article IV consultation, the Fund’s regular health check of a member’s economy.
A staff-level agreement is not the final step. The money moves only after the Executive Board approves it. That usually follows once the government completes any outstanding commitments.
The economic picture
In her closing statement, Petrova said EFF-backed policies helped the country weather the Middle East conflict and preserve macroeconomic stability.
The figures she cited:
- Real GDP grew 4 percent in the first three quarters of FY26. The IMF puts full-year growth at 3.6 percent.
- Headline inflation peaked in May and eased to about 10.3 percent in September.
- Gross reserves rose to about $21.5 billion by the end of September.
- Strong remittances kept the FY26 current account broadly balanced.
She also pointed to sovereign rating upgrades and renewed access to international markets as signs of stronger policy credibility. She warned that risks remain high. These include geopolitical tensions, volatile energy prices, tighter global financial conditions and trade disruptions.
Conditions the IMF wants to see
The Fund said it expects the government to stay on a disciplined path. Its priorities include:
- Fiscal policy: Full implementation of the FY27 budget, anchored by an underlying primary surplus of 2.0 percent of GDP. Tax and revenue reforms such as digital invoicing and risk-based audits should back it.
- Social spending: Health and education spending has risen from 2.2 percent of GDP in FY24 to 2.5 percent in FY26, with a commitment to reach 2.8 percent in FY27.
- Fuel support: The IMF wants the government to end the fuel support scheme promptly because of its cost and broad targeting. Any future relief should stay limited, timebound and targeted.
- Monetary policy: The State Bank of Pakistan should keep a tight stance until inflation returns durably to its target range. The exchange rate should stay flexible.
- Energy: Timely tariff adjustments and efficiency reforms to stop circular debt from building up again.
The Article IV talks also pushed for more competition, privatization, better governance of state-owned enterprises and stronger anti-corruption institutions.
Why it matters for Pakistan
For households, the agreement matters mainly through prices and energy costs. Inflation near 10 percent is still high. The call to end broad fuel support points to tighter subsidies ahead.
For the economy, IMF approval often signals confidence to other lenders and investors. Reserves above $21 billion give the government more room. Still, the IMF’s own warning about energy prices shows how quickly that cushion can be tested.
The next step is the Executive Board vote. Wire Examiner will report when it is scheduled.
