IMF approves Pakistan reviews, unlocking $1.2bn in funds

Islamabad has two programmes with multilateral lender to support its economy

Pakistan Finance Minister Muhammad Aurangzeb speaks during the annual meetings of the IMF and World Bank in Washington in October 2024. Bloomberg

The International Monetary Fund's executive board on Monday approved Pakistan's two loan reviews, unlocking about $1.2 billion.

The fund's executive board said Pakistan's commitment to implementing the programme has helped to keep stability and improve financing conditions despite the devastating floods this year.

The approval cleared the way for the immediate disbursement of about $1 billion under Pakistan's 37-month Extended Fund Facility, in addition to about another $200 million from its Resilience and Sustainability Facility programme.

The IMF approved Pakistan's $7 billion EFF programme in 2024 and its $1.4 billion RSF – the fund's programme to support countries' economic resilience against climate vulnerabilities – in May.

It said said Pakistan has made “significant progress” in stabilising its economy since the introduction of the EFF programme. It also said it expects inflation on food prices due to the floods to be temporary.

“Pakistan’s reform implementation under the EFF arrangement has helped preserve macroeconomic stability in the face of several recent shocks,” IMF deputy managing director Nigel Clarke said in a statement.

Mr Clarke also noted Pakistan's commitment to build fiscal policy credibility by sticking with its fiscal primary balance target for next year while also addressing relief needs from the flooding.

“Reducing Pakistan’s vulnerability to extreme weather events, which has been underscored by the recent floods, will enhance macroeconomic and fiscal sustainability,” he said.

Rescue workers and residents search for victims in the debris of collapsed houses after torrential rain in northern Pakistan's mountainous Khyber Pakhtunkhwa province. AFP

The storm that caused heavy rain and flooding in northern Pakistan killed at least 20 people on Monday, local officials said. AFP

Residents wade through a flooded street in Khyber Pakhtunkhwa province. The unusually intense monsoon season has left more than 250 people dead in recent days. AFP

Residents and rescue workers search through the debris of this collapsed house. AFP

Men retrieve a motorbike from a thick layer of mud. Reuters

Local residents assess a damaged house in Buner district. AP

A man clears water from a home flooded in Peshawar. EPA

Vendors take shelter under an umbrella during the monsoon rains in Peshawar. EPA

People gather near a damaged vehicle and scattered debris following a flash flood in Mingora, the main city of Swat Valley. AFP

Floodwater flows near a damaged market. AFP

People walk past damaged vehicles and scattered debris. AFP

People walk past scattered debris. AFP

A firetruck submerged in floodwater. AP

A boy clears debris next to the Swat river. EPA

People survey damage caused by the flash floods. EPA

Injured victims receive treatment at a hospital in Daggar. AP

Residents recover belongings from the remains of a damaged home. Reuters

Local residents navigate through muddy streets. AP

A river overflowing in Mingora. AP

The IMF approved of Pakistan's $7 billion bailout package in 2024 to help support the country's struggling economy. The programme includes policies and reforms aimed at structural challenges and strengthening Pakistan's macroeconomic stability.

Other key pillars of the programme include pushing for reforms to boost competition and address state-owned enterprises, develop human capital and restore the viability of its energy sector.

The fund also approved its $1.4 billion RSF with Pakistan in May to strengthen climate resilience.

The Washington-based lender said the latest approvals bring total disbursement under the two programmes to about $3.3 billion.