Pakistan and IMF Reach $1.2bn Staff-Level Agreement

Key Takeaways

Pakistan and the IMF have reached a staff-level agreement for a $1.2bn loan tranche.
The agreement is subject to approval by the IMF Executive Board.
Pakistan will have access to $1bn under the EFF and $210m under the RSF.

Pakistan and the International Monetary Fund (IMF) have reached a staff-level agreement for a $1.2 billion loan tranche, qualifying Pakistan to draw from the Fund’s resources within four to five weeks.

The agreement, which is subject to approval by the IMF Executive Board, will provide Pakistan with $1 billion under the Extended Fund Facility (EFF) and $210 million under the Resilience and Sustainability Facility (RSF), bringing total disbursements under the two arrangements to about $5.7 billion.

The IMF team, led by Iva Petrova, conducted discussions in Pakistan from September 23 to October 7, 2026, under the 2026 Article IV consultation and on the fourth review of the 37-month Extended Arrangement under the EFF and the third review of the 28-month arrangement under the RSF.

The agreement is contingent upon Pakistan’s commitment to phasing out the fuel subsidy scheme promptly, bringing improvements in social and health sector spending, and enhancing governance of state-owned companies.

According to the IMF, program implementation under the EFF has remained broadly on track despite a challenging external environment. Real GDP growth reached 4% in the first three quarters of FY26, and although higher energy prices and supply disruptions weakened the momentum, FY26 growth is estimated at 3.6%.

Headline inflation moderated to about 10.3% in September after peaking in May, while core inflation remained contained. The current account was broadly balanced in FY26, supported by strong remittances, and gross reserves rose to about $21.5 billion by end-September.

The fund stated that risks remain high, particularly from geopolitical tensions, volatile energy prices, tighter global financial conditions, and trade disruptions. The authorities remain committed to sound macroeconomic policies, which are critical to safeguarding stability amid the ongoing shock-prone environment.

Revenue and expenditure management, including the steadfast implementation of the FY27 budget, anchored by an underlying primary surplus of 2% of GDP, supported by tax policy and revenue administration measures, are critical to placing public debt on a durable downward path.

The IMF team has reached a staff-level agreement with the Pakistani authorities on the fourth review of the 37-month Extended Arrangement under the Extended Fund Facility (EFF) and the third review of the 28-month arrangement under the Resilience and Sustainability Facility (RSF).
IMF, Lending agency