Post by : Rameen Ariff

Following the approval by the International Monetary Fund's (IMF) Executive Board, Pakistan has received $1.2 billion under the Extended Fund Facility (EFF) and the climate-focused Resilience and Sustainability Facility (RSF), according to a statement issued by the State Bank of Pakistan (SBP) on Thursday. The central bank said the disbursed amount would be reflected in SBP’s foreign exchange reserves for the week ending December 12, 2025.

The IMF approved the loan package during its meeting on December 8, 2025, after completing the second review of Pakistan’s economic reform program under the EFF and the first review under the RSF. This financial support is aimed at sustaining macroeconomic stability while promoting growth and climate resilience in Pakistan.

Deputy Managing Director and Acting Chair of the IMF, Nigel Clarke, highlighted that Pakistan’s implementation of reforms under the EFF has helped maintain macroeconomic stability despite recent domestic and global shocks. He noted that real GDP growth has accelerated, inflation expectations have remained stable, and fiscal and external imbalances have gradually moderated. Clarke emphasized that Pakistan needs to continue prudent policies to further strengthen economic stability while advancing reforms necessary for sustainable, private sector-led growth.

Clarke also praised Pakistan’s commitment to achieving the FY2026 primary balance target while addressing urgent relief needs following the recent severe floods. He stressed that tax policy simplification and base broadening will be essential to achieving fiscal sustainability and creating fiscal space to support climate resilience, social protection, human capital development, and public investment. On monetary policy, he said that maintaining a tight stance has been crucial in controlling inflation, which should remain within SBP’s target range. Enhancing central bank communication and deepening the interbank foreign exchange market will support effective monetary policy and exchange rate flexibility.

The IMF further urged Pakistan to enforce strong financial regulations to maintain a sound and adequately capitalized financial sector while promoting capital market development to expand financing options for both public and private sectors. Structural reforms are needed to unlock growth potential, attract high-impact private investment, and improve governance. The recent publication of the Governance and Corruption Diagnostic report was described as a positive step toward accelerating governance reforms, with additional focus recommended on SOE governance and privatization to improve the business environment and economic data quality.

Prime Minister Shehbaz Sharif welcomed the IMF’s financial announcement, saying it reflects Pakistan’s progress in implementing key measures to ensure economic stability and growth. In a statement, he said the IMF’s recognition of Pakistan’s effective execution of economic reforms highlights the dedication of Finance Minister Muhammad Aurangzeb and his team in driving the country’s economic agenda.

This $1.2 billion IMF support is expected to strengthen Pakistan’s foreign reserves, bolster investor confidence, and provide the necessary resources to maintain macroeconomic stability while supporting reforms that will enable sustainable economic growth in the medium term.

#Global Economy #World News