IMF Approves $1.2 Billion Loan Package for Pakistan's Economic Recovery and Stability

The International Monetary Fund announced on Tuesday the achievement of a staff-level agreement with Pakistan regarding its loan program, which will enable the country to access $1.2 billion following approval from the fund's executive board.

Pakistan will receive $1 billion through the IMF's Extended Fund Facility and an additional $200 million via the Resilience and Sustainability Facility, bringing total disbursements across both arrangements to approximately $3.3 billion.

Nations operating under IMF lending programs must undergo regular reviews that, when approved by the fund's executive board, trigger the release of loan tranches.

"With support from the EFF, Pakistan's economic program is successfully establishing macroeconomic stability and restoring market confidence," the IMF stated in its official release.

The organization noted that Pakistan's economic recovery continues as planned, with controlled inflation, strengthening external financial buffers, and improving financial conditions evidenced by significantly narrowed sovereign spreads.

Pakistan has additionally committed to maintaining an appropriately stringent, data-driven monetary policy and enhancing climate resilience following recent catastrophic flooding events.

Muhammad Aurangzeb, Pakistan's finance minister, had earlier on Tuesday indicated that the country was positioned to finalize a preliminary agreement with the IMF, following the departure of an IMF delegation from Pakistan last week without concluding arrangements.

During an interview, Aurangzeb revealed that the government now intends to return to capital markets, beginning with its first green bond denominated in Chinese yuan before year-end, followed by at least a $1 billion international bond issuance.

The IMF's financial support in September 2024 helped stabilize Pakistan's $370 billion economy after a severe economic crisis that had caused significant currency depreciation.