ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have reached an agreement on a new 28-month Resilience and Sustainability Facility (RSF) worth $1.3 billion, bringing the total IMF support for the country to $8.3 billion under the Extended Fund Facility (EFF). The agreement, announced Wednesday, includes key economic reforms such as a new carbon levy, lower electricity tariffs, and reduced protectionism in the automobile sector.
Subject to IMF Executive Board approval, the deal will grant Pakistan immediate access to $1 billion, increasing total disbursements under the EFF to $2 billion. As part of the agreement, the government is set to reduce electricity tariffs by Rs7 per unit starting April 2025 while implementing a gradual carbon levy on hydrocarbons, beginning with Rs3-5 per litre. The automotive sector’s tariff protections will also be reduced, with average duties declining from 10.5% to 6% by FY2030.
The agreement prioritizes fiscal consolidation, reducing energy subsidies, and maintaining tight development spending. Additionally, water pricing reforms will be introduced in coordination with provincial governments.
The IMF commended Pakistan’s economic progress, citing lower inflation, improved financial conditions, and stronger external balances. However, it warned against policy slippages and global financial risks. The government has committed to sustaining fiscal discipline, implementing energy sector reforms, and expanding renewable energy adoption while ensuring exchange rate flexibility and price stability.
Prime Minister Shehbaz Sharif hailed the agreement, emphasizing that it was secured without additional taxation measures, demonstrating the government’s strategic planning. The deal is expected to bolster Pakistan’s foreign reserves, ensuring continued economic stability.
