WASHINGTON, USA: International Monetary Fund’s (IMF) Executive Board gave its approval on Friday to the latest review of Pakistan’s economic reform programme, unlocking $1.2 billion in financing under the existing arrangements.
Confirming the development from Islamabad, Finance Minister Muhammad Aurangzeb described the decision as a reflection of Pakistan’s steady advancement on tough but essential economic reforms.
The approval came during an IMF Executive Board session in Washington, DC, signalling continued international backing for Pakistan’s reform agenda.
The disbursement includes around $1 billion under the Extended Fund Facility (EFF) and approximately $200 million under the Resilience and Sustainability Facility (RSF). With this tranche, total disbursements under the current programme have risen to about $4.5 billion.
The IMF stated that the approval follows Pakistan’s successful achievement of key structural benchmarks, including tax policy reforms and energy pricing adjustments designed to enhance fiscal discipline and macroeconomic stability.
Officials said the programme remains focused on rebuilding foreign exchange reserves, managing inflationary pressures, and sustaining a tighter fiscal stance despite ongoing external and regional economic headwinds.
Under the programme’s framework, Pakistan’s future reform efforts will prioritise maintaining a primary budget surplus of around two per cent of GDP, expanding the tax base, and improving compliance in sectors such as retail and agriculture that have historically been under-taxed. Additional revenue measures are expected to help raise the tax-to-GDP ratio over the medium term.
Energy sector reforms continue to be a cornerstone of the IMF agreement, with commitments to regular and predictable tariff revisions for electricity and gas aimed at reducing circular debt and improving sector viability. The programme also calls for continued restructuring and privatisation of selected state-owned enterprises to ease fiscal pressures and boost efficiency.
Officials believe the latest review will strengthen Pakistan’s external position, with the incoming funds expected to further bolster foreign exchange reserves in the weeks ahead. The IMF has also advised Pakistan to maintain a tight, data-driven monetary policy to keep inflation expectations anchored and preserve macroeconomic stability.
Looking forward, an IMF mission is scheduled to arrive in Islamabad on May 15 for discussions with Pakistani authorities on the upcoming federal budget and to assess progress on structural reforms.
Pakistan is currently operating under a $7 billion, 37-month IMF programme designed to stabilise the economy through fiscal discipline, structural reforms, and long-term growth measures. Analysts note that the approval offers near-term reassurance to financial markets while reinforcing the government’s commitment to its reform path under the multi-year programme.
