Pakistan Secures Swift IMF Agreement Amid Economic Reforms

Islamabad: Pakistan and the International Monetary Fund have reached a staff level agreement for the second review under the Extended Fund Facility, alongside the first review of the Resilience and Sustainability Facility. The agreement, finalized on October 14, 2025, comes just six days after the IMF team’s visit to Pakistan, marking a notably swift negotiation period.

This rapid agreement signals Pakistan’s ongoing commitment to economic reforms, as underscored by the absence of additional conditions typically required for board approval. Historically, Pakistan faced demands for financing assurances from development partners, as seen in the July 2024 staff level agreement. The current agreement demonstrates a departure from such precedents.

Pakistan is set to continue its fiscal consolidation efforts, aiming for a fiscal primary surplus of 1.6% of GDP. Any risks to revenue targets will be mitigated through tax policy and compliance measures. The IMF has also emphasized the importance of maintaining a tight, data-dependent monetary policy to manage inflation within the target range of 5-7%.

Following IMF board approval, Pakistan is expected to receive $1.2 billion, with $1 billion allocated under the EFF program and $200 million under the RSF. This financial inflow will support the central bank in achieving its December 2025 reserves target of $15.5 billion.

Efforts to restore the viability of Pakistan’s energy sector will continue, including measures to prevent circular debt accumulation and ensure cost recovery through tariff adjustments. The government is also focused on privatizing distribution companies and fostering a competitive electricity market.

In terms of climate resiliency, Pakistan’s initiatives include promoting green mobility and transport decarbonization. Future reforms will focus on enhancing climate information architecture, financial risk management, and aligning energy sector reforms with national mitigation commitments.

The agreement reflects Pakistan’s strategic approach to addressing economic challenges and underscores its dedication to sustainable development and fiscal responsibility.