Key Takeaways
May 9, 2026 · 3 min read · By Rishabh Bhardwaj
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The IMF's Executive Board approved Pakistan's latest programme review on Friday, clearing the release of $1.32 billion in fresh financing. Of that, roughly $1.1 billion comes under the Extended Fund Facility (EFF) and about $220 million under the Resilience and Sustainability Facility (RSF). Total disbursements under both arrangements now stand at approximately $4.8 billion.
Pakistan's broader programme is a $7 billion, 37-month arrangement signed to stabilise an economy that had been under severe fiscal and external pressure. Friday's approval means the country met the key conditions attached to this review, including tax policy steps and energy price adjustments designed to reduce the government's fiscal deficit and cut losses in the energy sector.
The Fund gave Pakistan a broadly positive scorecard. GDP growth has picked up, the current account was roughly balanced through the first nine months of FY26, and foreign exchange reserves rose to $16 billion at end-December 2025, up from $14.5 billion at end-June 2025. Inflation, however, has crept higher as global commodity price increases passed through into domestic energy tariffs, a direct consequence of the pricing reforms the programme requires.
IMF Deputy Managing Director Nigel Clarke said Pakistan must keep macroeconomic policy tight while speeding up reforms, particularly given the Middle East war, which the IMF flagged as a live external risk. Higher oil and commodity prices from the conflict can quickly widen Pakistan's import bill and strain its current account, making reserve buffers and exchange-rate flexibility more important than usual.
The IMF laid out a clear set of priorities Pakistan must sustain to keep the programme on track. These include:
The State Bank of Pakistan's monetary policy stance was described as appropriately tight, and the IMF urged vigilance against inflation feeding through into wages and expectations. On the financial sector, the Fund called for ensuring banks stay adequately capitalised and specifically flagged capital shortfalls in microfinance institutions as an area needing attention.
An IMF mission is scheduled to visit Islamabad on May 15 to work with authorities on the next federal budget and assess progress on structural reforms. That visit will be an early signal of how smoothly Pakistan navigates the next review. For markets, the immediate effect is a boost to Pakistan's external liquidity position, with the fresh inflows expected to push reserves higher in the coming weeks.
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