IMF Unlocks $1.2 Billion as Pakistan Sticks to Fiscal Discipline

Publication of corruption assessment report by mid-November set as prior action before Executive Board approval

ISLAMABAD: The International Monetary Fund (IMF) has agreed to release $1.2 billion for Pakistan after the government held its ground on pre-flood fiscal targets and pledged to publish the long-awaited Governance and Corruption Diagnosis Report by November 15. The deal includes $1 billion under the Extended Fund Facility (EFF) and $200 million under the Resilience and Sustainability Facility (RSF), marking the successful completion of three weeks of technical-level talks in Islamabad.

By agreeing not to revise down the 1.6% of GDP primary budget surplus target—equivalent to Rs2.1 trillion—Pakistan cleared the path for the IMF’s Executive Board approval expected later this month. The Fund credited Islamabad’s commitment to prudent fiscal management for restoring investor confidence, citing a current account surplus for the first time in 14 years, declining inflation, and narrowing sovereign bond spreads.

However, the IMF warned that Pakistan’s fiscal position remains fragile. The Federal Board of Revenue (FBR) missed its first-quarter tax target by Rs198 billion, threatening the Rs14.13 trillion annual goal. Flood-related damages, estimated between Rs585–744 billion, have trimmed growth projections to 3.2–3.5%, below the government’s 4.2% target.

The IMF also pressed for faster reforms in state-owned enterprises (SOEs), the power sector, and tax policy design, while calling for transparency to sustain market confidence. Officials say the upcoming tranche will shore up foreign reserves, now hovering around $9 billion, and stabilize the rupee, which has inched up modestly in recent weeks.