Post by : Rameen Ariff

Islamabad: Pakistan has achieved a major breakthrough as the International Monetary Fund (IMF) has reached a staff-level agreement with the country, allowing it to access $1.2 billion in financial support. This deal is expected to help Pakistan stabilize its economy, improve investor confidence, and strengthen its recovery from recent financial challenges.

According to the IMF, Pakistan will receive $1 billion under the Extended Fund Facility and $200 million under the Resilience and Sustainability Facility. With this new disbursement, the total amount provided to Pakistan under both arrangements has reached nearly $3.3 billion. The agreement comes after several weeks of discussions between IMF representatives and Pakistan’s financial team, marking another step toward ensuring the country’s long-term financial stability.

The IMF appreciated Pakistan’s economic progress, noting that the country’s recovery remains on track. The Fund stated that Pakistan’s economy is showing signs of strength, with inflation remaining contained, external reserves increasing, and financial market confidence improving. It also highlighted that supported by the Extended Fund Facility, Pakistan’s economic program is successfully strengthening macroeconomic stability and rebuilding trust among investors and global partners.

In addition to stabilizing the economy, Pakistan has pledged to maintain a tight and data-based monetary policy to manage inflation effectively. The government also assured the IMF of its commitment to building stronger climate resilience under the Resilience and Sustainability Facility, especially after the devastating floods that severely impacted the nation in recent years. These reforms are part of the country’s broader strategy to ensure that future growth is both sustainable and inclusive.

Pakistan’s Finance Minister Muhammad Aurangzeb confirmed that the government and IMF had finalized the details of the new agreement. He said the deal reflects the international community’s confidence in Pakistan’s ongoing economic reforms and fiscal discipline. In an interview, he revealed that Pakistan now plans to return to global capital markets, starting with the launch of its first green bond denominated in Chinese yuan before the end of the year. He added that the government also plans to issue an international bond worth at least $1 billion to attract more foreign investment and strengthen foreign exchange reserves.

The IMF has played a key role in supporting Pakistan’s economy during its most difficult phases. In September 2024, the IMF’s assistance helped Pakistan’s $370 billion economy recover from a severe crisis that had caused its currency to weaken and its reserves to fall dangerously low. The ongoing support has allowed Pakistan to focus on implementing structural reforms, reducing its fiscal deficit, and reviving its export sector.

Once the IMF’s Executive Board gives its final approval to the agreement, Pakistan will receive the next tranche of funds, which will further improve its financial position. The IMF emphasized that this program aims to restore investor trust, boost growth, and ensure that Pakistan continues to move toward sustainable economic stability. Economists believe that the latest IMF deal will also make it easier for Pakistan to attract international investment and partnerships while maintaining strong climate and fiscal reforms.

This agreement marks another important milestone for Pakistan’s journey toward financial resilience and growth. The combination of IMF support, government reforms, and growing market confidence could lead to a more stable economic future for the country if these measures are properly implemented and sustained in the long run.

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