ISLAMABAD: Pakistan has reached a staff-level agreement (SLA) with the International Monetary Fund (IMF) on the first review of its ongoing 37-month, $7 billion bailout programme and secured a new $1.3 billion climate resilience fund, the IMF announced on Tuesday.
The new 28-month arrangement under the IMF’s Resilience and Sustainability Trust (RST) will provide Pakistan with funding to support climate adaptation and resilience-building reforms. Pending board approval, the agreement will unlock $1 billion under the existing Extended Fund Facility (EFF), bringing total disbursements under the bailout to $2 billion.
“Pakistan has made significant progress in restoring macroeconomic stability and rebuilding confidence despite a challenging global environment,” said Nathan Porter, the IMF’s mission chief to Pakistan. He noted that inflation has dropped to its lowest level since 2015, financial conditions have improved, and external balances have strengthened.
Pakistan had requested $1 billion from the IMF’s RST in October. The funding, designed for countries undertaking high-quality climate resilience reforms, is repayable over 30 years with a 10-year grace period and offers more favorable terms than the EFF.
The IMF highlighted key policy priorities for Pakistan, including fiscal consolidation to reduce public debt, structural reforms in taxation and energy, monetary policy adjustments, and climate action initiatives. The Fund also warned of downside risks, such as global financial conditions and geopolitical shocks, that could threaten Pakistan’s economic stability.
Finance Minister Muhammad Aurangzeb expressed optimism about the reforms, emphasizing Pakistan’s commitment to sustainable, export-led growth. He reaffirmed the government’s dedication to economic restructuring and reducing inefficiencies in state-owned enterprises and the energy sector.
With the economy stabilizing under the IMF’s bailout programme, the agreement comes at a crucial time as Pakistan prepares its annual budget, expected in June.
