Pakistan received a considerable bolstering from the International Monetary Fund (IMF), which authorized an upfront $1 billion disbursement under the Extended Fund Facility (EFF) and a further $1.4 billion under the Resilience and Sustainability Facility (RSF).
Prime Minister Shehbaz Sharif welcomed the decision, claiming that it foils India’s attempts to derail Pakistan’s economic development. The money will be used to support Pakistan’s current economic reforms and climate resilience efforts, a key step toward long-term stability.
In a release, the IMF said that its Executive Board had completed the first review of Pakistan’s economic reform program under the EFF. “This achievement triggers an immediate disbursement of approximately $1 billion (SDR 760 million), bringing total disbursements under the EFF to approximately $2.1 billion (SDR 1.52 billion),” the release stated. The Board also approved Pakistan’s request for the RSF, opening access to approximately $1.4 billion (SDR 1 billion).
The IMF has applauded Pakistan’s improvement under the EFF, as it stated that Pakistan’s policy steps have achieved important milestones towards stabilizing the economy and restoring confidence amid a challenging global environment. “Pakistan’s fiscal restraint has been remarkable, with a primary surplus of 2% of GDP during the first half of FY25 in line with the full-year goal of 2.1% of GDP,” the IMF stated.
Inflation fell to an unprecedented 0.3% in April, an all-time low, allowing the State Bank of Pakistan to lower the policy rate by 1,100 basis points since June 2025. Foreign exchange reserves have also increased, reaching $10.3 billion at the end of April, from $9.4 billion in August 2024, with forecasts to reach $13.9 billion by June.
The RSF, the IMF further noted, will enhance Pakistan’s long-term economic and climate resilience by supporting its efforts to build up its defenses against natural disasters. In return, a statement issued by the Prime Minister’s Office announced that PM Shehbaz Sharif welcomed the IMF’s move, with pride in Pakistan’s economic turnaround. He also made a jibe at India, blaming it for seeking to stall Pakistan’s advancement through “hostile tactics.” “Pakistan is headed towards prosperity, and no external meddling can deflect our attention from development,” the statement had him saying.
Prime Minister Shehbaz Sharif celebrated the International Monetary Fund’s (IMF) latest decisions, declaring that they have decisively rejected India’s false narratives. “India’s attempts to derail Pakistan’s IMF program have been unambiguously foiled,” he was quoted as saying in a Prime Minister’s Office statement.
The prime minister stressed that the IMF-supported program is a pillar for stabilizing Pakistan’s economy and guiding it towards sustained recovery. He underlined the government’s priority on key reforms, such as transforming the tax system, improving the efficiency of the energy sector, and promoting private sector development. “The favorable economic trends in the last 14 months are a reflection of our government’s prudent policies,” he said, highlighting Pakistan’s resolve to a policy of economic stability, strong performance, and forward-looking planning.
Approval by the IMF Executive Board has triggered an upfront disbursement of $1 billion, taking the cumulative amount of money disbursed under the loan program to around $2 billion. Pakistan will get seven equal disbursements of around $1 billion (SDR 760 million) when it completes seven semi-annual reviews under the program successfully.
In July, Pakistan and the IMF agreed on a three-year, $7 billion package of support aimed at making macroeconomic stability more permanent and laying the foundations for resilient and inclusive growth. On March 25, both sides agreed in the first half-yearly review of the 39-month, $7 billion loan program at staff level. The deal enumerated major reforms to be undertaken such as introducing a carbon tax, timely revision in electricity tariffs, increased water rates, and automotive sector liberalization.
In addition, a 28-month Resilience and Sustainability Facility (RSF) facility was agreed upon, offering access to about $1.3 billion (1 billion SDRs). This increases the total IMF support to about $8.3 billion. In contrast to the bailout package’s twice-a-year review timeline, RSF disbursements are contingent on the fulfillment of particular projects and policy actions to boost climate resilience.
After the board cleared, an IMF team is scheduled to arrive in Pakistan shortly to approve the budget for 2025-26, which would be laid in the National Assembly by early June. Key reforms, such as the carbon charge, water prices hike, and diminished protectionism in the auto sector, will roll out phased starting July 1.
The next budget will stay the course on fiscal prudence, with steps including rolling back energy subsidies and strictly managing spending on development to support ongoing economic consolidation.
Supported by the IMF backing, Pakistan will move forward on its economic reform and stabilization plan backed by a strong $8.3 billion package. Its upcoming 2025-26 budget will progressively implement the principal reforms, from carbon taxes to energy sector reform, as Pakistan pursues fiscal responsibility and growth that is sustainable. The government stands firm in the resolve to break through external setbacks and guide Pakistan to a promising future.