IMF Approves $1.2 Billion Loan for Pakistan 2025 | New EFF & RSF Disbursements Announced
The International Monetary Fund (IMF) has officially approved a $1.2 billion disbursement package for Pakistan after completing the second review of the Extended Fund Facility (EFF) and the first review of the Resilience and Sustainability Facility (RSF).
The decision was finalized by the IMF Executive Board in Washington, D.C., unlocking $1 billion under the EFF and $200 million under the RSF, bringing Pakistan’s total disbursements under both programs to $3.3 billion.
Strong Reform Progress and Fiscal Performance Praised
In its statement, the IMF commended Pakistan for strong program implementation despite facing serious economic challenges and the aftermath of devastating floods.
According to the Fund, Pakistan’s fiscal performance has shown robust improvement, achieving a primary surplus of 1.3% of GDP in FY25, while gross foreign reserves rose to $14.5 billion, up from $9.4 billion a year earlier.
The IMF noted that these improvements have helped stabilize the exchange rate, reduce inflation pressures, and restore investor confidence.
WhatsApp ChannelPolicy Focus: Stability, Reform, and Social Protection
The IMF emphasized that Pakistan’s policy priorities should now remain centered on:
- Maintaining macroeconomic stability through fiscal discipline.
- Broadening the tax base and improving tax administration.
- Enhancing competition and efficiency in state-owned enterprises (SOEs).
- Advancing energy sector reforms to address circular debt and improve efficiency.
- Expanding the social safety net to protect vulnerable households.
- Strengthening human capital through better education and health systems.
IMF Praises Pakistan’s Economic Rebound
Nigel Clarke, IMF Deputy Managing Director and Acting Chair, commended Pakistan’s reform progress, noting visible signs of recovery.
“Real GDP growth has accelerated, inflation expectations are easing, and both fiscal and external imbalances have moderated,” said Clarke.
He further stressed that continued prudent policies and tax reforms are crucial to sustain progress, while the government must also focus on financial sector resilience and energy market efficiency.
Climate Resilience and Sustainable Growth
A key element of this IMF program is the Resilience and Sustainability Facility (RSF), which supports Pakistan’s ongoing efforts to build resilience against natural disasters and climate risks.
Clarke underlined the importance of addressing climate vulnerability, especially given Pakistan’s repeated exposure to floods and extreme weather events.
The RSF, approved in May 2025, aims to strengthen water resource management, disaster response coordination, and climate integration into public budgeting.
“The RSF arrangement is helping Pakistan strengthen climate resilience, enhance disaster response capacity, and improve the disclosure of climate-related risks,” Clarke added.
Long-Term Objectives: Inclusive and Sustainable Recovery
The IMF programs — the 37-month EFF (approved in September 2024) and the 28-month RSF — together aim to:
- Reinforce macroeconomic stability through sound fiscal and monetary policies.
- Rebuild international reserves and improve external sustainability.
- Support inclusive growth while investing in human development.
- Promote climate-smart infrastructure and efficient public spending.
Outlook: Continued Reforms Key to Stability
Economic experts in Pakistan have welcomed the IMF’s approval, noting that it reflects growing confidence in the government’s reform agenda and policy discipline.
However, analysts warn that sustained reforms and fiscal prudence will be essential to maintain stability once IMF support phases out.
The government’s ability to broaden its tax base, cut energy losses, and strengthen governance will determine whether Pakistan can achieve self-reliant growth in the long term.
Final Word
The IMF’s latest $1.2 billion approval marks a critical milestone in Pakistan’s ongoing economic recovery and reform journey.
With reserves improving, fiscal stability returning, and new focus on climate resilience, the IMF support gives Pakistan a much-needed breathing space to sustain reforms, rebuild confidence, and protect its most vulnerable citizens.
