IMF approves another $1 . 2bn tranche for Pakistan - Newspaper

dawn.com · Mar 2, 2026 · Collected from GDELT

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• Allows Islamabad to draw $1bn under EFF and $200m under RSF after successful review• Says country maintained stability despite severe floods and a difficult global environment• Calls for continuing tight monetary policy, strengthening tax base, improving governance, focusing on SOE reforms and privatisation WASHINGTON: The Internat­ional Monetary Fund (IMF) has approved a fresh disbursement of around $1.2 billion to Pakistan under its dual-track bailout — the 37-month Extended Fund Facility (EFF) and the climate-focused Res­i­l­ience and Sustainability Facility (RSF). The decision came on Monday, after the IMF Exec­utive Board convened in Washington. The board’s statement highlighted that “Pakistan’s strong programme implementation, despite the recent devastating floods, has maintained stability and improved financing and external conditions”. It stressed that the country’s policy priorities remain centred on maintaining macroeconomic stability and advancing reforms to strengthen public finances, enhance competition, raise productivity and competitiveness, bolster the social safety net and human capital, reform state-owned enterprises (SOEs), and improve public service provision and energy sector viability. The approval reflects the Fund’s recognition of Pakistan’s significant progress in stabilising the economy and rebuilding confidence amid a challenging global environment. The board noted that Pakistan’s fiscal performance has been strong, with a primary surplus of 1.3 per cent of GDP achieved in FY25, in line with programme targets. Gross reserves stood at $14.5bn at end-FY25, up from $9.4bn a year earlier, and are projected to continue rebuilding in FY26 and over the medium term. The board also noted that “inflation has increased, reflecting the impact of the floods on food prices, but this is expected to be temporary”. IMF Deputy Managing Director and Acting Chair Nigel Clarke said in a statement that “in the face of an uncertain global environment, Pakistan needs to maintain prudent policies to further entrench macroeconomic stability, while accelerating reforms necessary to achieve stronger, private-sector-led, and sustainable medium-term growth”. He highlighted the importance of “advancing reforms to raise revenues via tax policy simplification and base broadening”, describing it as key to achieving fiscal sustainability and building the fiscal space necessary to boost climate resilience, social protection, human capital development, and public investment. Mr Clarke also stressed that “reforms in the energy sector are critical to safeguarding its viability and improving Pakistan’s competitiveness”. He noted that timely power tariff adjustments had “helped reduce the stock and flow of circular debt”, while emphasising that “subsequent efforts need to focus on sustainably reducing electricity production and distribution costs and addressing inefficiencies in the power and gas sector”. The board stated that RSF tranche is designed to support Pakistan’s climate adaptation and disaster resilience agenda. Clarke explained that it backs initiatives to “strengthen natural disaster response and financing coordination, improve the use of scarce water resources, raise climate considerations in project selection and budgeting, and improve the information on climate-related risks in financing decisions”. The board noted that “the recent floods highlight the urgency of moving swiftly on climate-related reforms to build resilience to the frequent natural disasters that Pakistan faces. The authorities are making progress on such reforms, supported by the RSF”. The IMF welcomed Pakistan’s publication of the Governance and Corruption Diagnostic Assessment, describing it as “a welcome step in accelerating governance reforms”. Mr Clarke added that “additional efforts should focus on SOE governance reforms and privatisation, enhancing the business environment, and improving economic data and statistics”. The board highlighted that Pakistan has made notable progress on structural reforms. “Efforts to advance structural ref­orms should continue to unlock growth potential and attract high-impact private investment,” Mr Clarke said, stressing that sustained reform in state-owned enterprises, energy policy, and public service delivery is essential for lasting economic stability. With this tranche, total disbursements to Pakistan under the EFF and RSF now stand at approximately $3.3 billion, supporting both macroeconomic stabilisation and long-term structural reforms for climate resilience. Observers said that the funds will help provide breathing space for debt servicing, bolster import cover, and support critical investments, including infrastructure upgrades, water management, and other climate-adaptation measures under the RSF roadmap. Officials in Islamabad welcomed the approval as a vote of confidence in Pakistan’s reform efforts and macroeconomic management, while emphasising that the real test will be in turning these commitments into tangible economic recovery. Analysts noted that continued discipline in fiscal and energy policy, governance reforms, and climate adaptation will be crucial to ensure that the relief is sustainable and that Pakistan can build resilience against future shocks. The IMF’s endorsement comes amid a challenging global backdrop, including commodity-price volatility, tight global financial conditions, and recurring climate-related disasters. Against this bac­kdrop, the approval is being seen not just as a financial lifeline, but as a signal that disciplined reforms and effective use of funds can strengthen Pakistan’s economic foundations and resilience to future shocks. Published in Dawn, December 9th, 2025