On Dec 09, 2025, the IMF Executive Board’s approval brought great news for Pakistan. The board approved $1.29 billion to support the country’s ongoing Pakistan economic program. This approval follows a successful review of Pakistan’s fiscal policies, monetary measures, and structural reforms. The funds include $1.09 billion under the Extended Fund Facility (EFF) and the first $200 million from the Resilience and Sustainability Facility (RSF). The RSF supports climate adaptation and climate mitigation efforts, while the EFF helps with broader economic stabilization.
This funding is part of a 37-month arrangement, first initiated in September 2024. Pakistan previously received $1 billion in September 2024 and another $1 billion in May 2025. The latest tranche disbursement is expected to be transferred to the State Bank of Pakistan within hours. This transfer will boost foreign exchange reserves and strengthen Pakistan’s financial position amid ongoing inflationary pressures and global economic uncertainties.
Details of the IMF Funding
The $1.29 billion approved by the IMF Executive Board consists of multiple parts. $1.09 billion comes from the Extended Fund Facility (EFF). This is part of Pakistan’s long-term economic program aimed at fiscal reforms and improving monetary policy. The additional $200 million comes from the Resilience and Sustainability Facility (RSF). This fund is meant to support climate adaptation and climate mitigation programs in Pakistan, addressing vulnerabilities caused by extreme weather and environmental challenges.
The tranche disbursement will help Pakistan meet several financial obligations and strengthen external financing. The EFF and RSF both have monitoring requirements, ensuring Pakistan continues structural reforms. Officials in Washington reviewed fiscal measures, tax reforms, and other monetary policy steps before approving this funding. The financial support aims to create long-term stability, helping Pakistan maintain investor confidence and enhance foreign exchange reserves.
| Facility | Amount | Purpose | Previous Tranches |
|---|---|---|---|
| EFF | $1.09 billion | Fiscal and monetary stabilization | $1 billion (Sep 2024), $1 billion (May 2025) |
| RSF | $200 million | Climate adaptation & mitigation | First tranche under this facility |
Impact on Pakistan’s Economy
The approval of $1.29 billion will directly affect Pakistan’s economic stabilization efforts. Strengthened foreign exchange reserves will help control the local currency’s value and reduce inflationary pressures. The funds also provide Pakistan with external financing needed for energy, agriculture, and public service sectors. By supporting these key areas, the IMF aims to stabilize the country’s economy while ensuring the population benefits from consistent services and energy supplies.
The disbursement also strengthens monetary policy effectiveness. Pakistan can now implement targeted measures to control inflation and improve the investment climate. Additionally, the IMF recommends tax system reforms, including tax exemption reduction, improved Federal Board of Revenue (FBR) accountability, and simplification of tax processes. Over time, these steps are expected to enhance revenue collection and create a more transparent, robust economic system that supports growth and resilience against future challenges.
Reactions and Next Steps
The government welcomed the IMF Executive Board approval, highlighting that the funding will help Pakistan maintain financial stability and attract further investments. Officials emphasized that the $1.29 billion disbursement will be used for fiscal priorities while ensuring compliance with structural reforms. Economic analysts in Pakistan noted that this funding could strengthen investor confidence and improve the overall business environment.
The IMF continues to recommend comprehensive reforms, including tax system simplification, improved FBR operations, and annual progress reports to ensure accountability. Pakistan is expected to implement these recommendations before the fiscal year 2026-27 budget. Long-term, the country aims to enhance economic stabilization, attract external financing, and build resilience against climate-related vulnerabilities. The combination of these measures is likely to promote sustainable growth and financial stability for Pakistan.
Frequently Asked Questions
Q1: Why did the IMF approve $1.29 billion for Pakistan?
The IMF approved $1.29 billion to support Pakistan’s ongoing economic program, strengthen foreign exchange reserves, and implement fiscal and structural reforms.
Q2: What are the components of this funding?
The funding includes $1.09 billion under the Extended Fund Facility (EFF) and $200 million from the Resilience and Sustainability Facility (RSF).
Q3: How will the funds impact Pakistan’s economy?
The funds will boost economic stabilization, reduce inflationary pressures, support monetary policy, and improve external financing.
Q4: What reforms has the IMF recommended?
The IMF suggests tax system reforms, tax exemptions reduction, improved FBR accountability, and continued structural reforms.
Q5: When will Pakistan implement these reforms?
Pakistan is expected to implement key reforms before the fiscal year 2026-27 budget, as advised by the IMF.
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IMF approves $1.29 billion for Pakistan, boosting economic stability, foreign reserves, and supporting fiscal and climate reforms.
