In a significant move to address Pakistan’s economic challenges, the International Monetary Fund (IMF) announced it has reached a staff-level agreement with Pakistan on the third review of its Extended Fund Facility (EFF) and the second review of its Resilience and Sustainability Facility (RSF). This agreement unlocks a $1.2 billion disbursement, which is part of a broader program to support Pakistan’s economic stability.
The EFF review focuses on strengthening Pakistan’s economy through sustained policies that aim to build market confidence, improve fiscal performance, and stabilize external buffers. Meanwhile, the RSF review emphasizes resilience and sustainable development, particularly in energy and social sectors. The IMF highlighted that Pakistan’s ongoing policies had gained momentum, with inflation and the current account remaining under control, but warned that the geopolitical situation in the Middle East had introduced risks of volatile energy prices, inflation, and slower growth.
The disbursements, totaling around $4.5 billion, are contingent on final approval by the IMF Executive Board. The funding will be used for critical areas such as health, education, and social protection, as well as strengthening Pakistan’s tax collection efforts. The FBR’s ambitious tax collection target for the upcoming fiscal year is set at Rs15.08 trillion.
Among other priorities, the IMF urged Pakistan to adopt a more flexible approach to energy pricing, moving from fortnightly to weekly adjustments. The State Bank of Pakistan is also advised to maintain a tight monetary policy and remain prepared to adjust interest rates in response to any inflationary pressures, especially from global food and fuel prices.
With the ongoing Middle East conflict clouding global economic outlooks, the IMF stressed the importance of a prudent fiscal stance, strong revenue mobilization, and targeted structural reforms to ensure Pakistan’s resilience and sustainability over the coming years.
