Islamabad: The International Monetary Fund (IMF) has approved a total financial assistance package of USD 2.4 billion for Pakistan, comprising the disbursement of a USD 1 billion tranche under the Extended Fund Facility (EFF) and the launch of a new USD 1.4 billion Resilience and Sustainability Facility (RSF) focused on climate resilience.
The decision, announced on Friday, follows Pakistan’s successful completion of required reform benchmarks under its existing 37-month economic reform programme. The newly approved funding is aimed at supporting macroeconomic stability and addressing climate vulnerabilities.
According to Pakistani officials, the USD 1 billion tranche will be released immediately, bringing total disbursements under the EFF to USD 2.1 billion. The RSF, a 28-month programme, will see phased disbursements designed to fund climate-related reforms and infrastructure projects.
Finance Minister Muhammad Aurangzeb and Secretary Finance Imdad Ullah Bosal played a key role in steering negotiations with the IMF, while Deputy Prime Minister Ishaq Dar helped ensure political support for key reforms. These included legislation for agriculture income tax in provinces such as Sindh and Balochistan.
Prime Minister Shehbaz Sharif welcomed the IMF’s decision, stating that the approval reflects Pakistan’s commitment to economic reforms and fiscal discipline. He emphasized that the funding was not a concession but a right under IMF membership, earned through compliance with strict programme conditions.
Under the new RSF agreement, Pakistan has committed to introducing a carbon levy from July 2025 and increasing water usage charges from next year. Additional commitments include improving disaster resilience, strengthening public investment processes, and promoting green mobility to combat pollution and public health risks.
The IMF has projected Pakistan’s GDP growth at 2.6% for the current fiscal year, with inflation expected to average 5.1%. For the next year, growth is forecast at 3%, with inflation projected around 7.7%.
Despite the positive outlook, the IMF warned of continued risks, including potential policy slippages, global financial volatility, and commodity price shocks, which could undermine economic stability. The IMF’s new climate facility aims to help countries like Pakistan adapt to increasing climate risks while maintaining fiscal and economic discipline. The programme includes measures to enhance transparency, improve coordination on disaster financing, and integrate climate risk into public financial management systems.
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