IMF, Pakistan reach staff-level agreement for $1.2bln tranche

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) reached a staff-level agreement on the fourth review of the $7 billion Extended Fund Facility (EFF).

The agreement has paved the way for the release of around $1.2 billion in fresh financing.



The agreement, reached after discussions between IMF officials and Pakistani authorities, still requires approval from the IMF Executive Board. Once approved, Pakistan is expected to receive approximately $1 billion under the EFF and another $210 million through the Resilience and Sustainability Facility (RSF).

According to an official statement from the IMF after review talks. the international lender said Pakistan’s economic programme remained broadly on track despite external pressures, including the impact of the Middle East conflict. It estimated that the economy grew by 3.6 per cent in fiscal year 2026, while real GDP growth reached 4 per cent during the first three quarters.

Pakistan’s inflation rate also reached its highest level in May 2026, according to the statement.

The statement noted that strong remittances from overseas Pakistanis helped keep the country’s current account deficit under control.

The IMF has also called for the gradual phasing out of the Prime Minister’s petrol subsidy scheme, while urging the government not to expand the programme further. The Fund recommended that the subsidy be restricted to eligible beneficiaries.

Read more: IMF-Pakistan talks ‘enter’ final stage

On the energy front, the IMF called on Pakistan to continue implementing energy-sector reforms and improve the recovery of outstanding dues. It also urged the government to take measures to reduce production costs in the energy sector and improve revenue collection in the gas sector.

The IMF further stressed the need to reduce losses in Pakistan’s gas sector, according to the statement.

The Fund also expressed concern over spending on health and education, noting that expenditure in both sectors remained below targeted levels.

According to the statement, Pakistan spent only 2.2% of its economy on public health and education in FY2025, while the figure increased to 2.5% in FY2026. For FY2027, the IMF has called for spending on health and education to rise to 2.8% of the economy.