IMF board approves $1.3B loan tranche for Pakistan

The International Monetary Fund’s Executive Board has approved a disbursement of $1.29 billion for Pakistan, the Fund said on Monday, calling the decision a significant milestone for the country’s ongoing loan program.

According to the Fund, the amount will be transferred to the State Bank of Pakistan within hours of the board’s approval.

The Executive Board reviewed the staff-level agreement reached in October and cleared a $1.09 billion tranche under Pakistan’s existing Extended Fund Facility (EFF). The IMF also approved the first $200 million tranche from the Resilience and Sustainability Facility (RSF), which supports Pakistan’s climate-related initiatives.

Pakistan has now received the third tranche under the EFF program, which began in September 2024 and spans 37 months. The first $1 billion disbursement was made in September 2024, followed by a second $1 billion tranche in May.

The IMF said the $200 million RSF climate-related tranche is expected to be transferred to Pakistan within the next few hours.

According to officials, the fresh tranche will be used to support macroeconomic stability, climate-related commitments under the RSF, and broader structural reforms previously agreed with the IMF.

IMF, Pakistan and fragile reforms

The IMF approved a $ 7 billion loan program for Pakistan in September last year, with the goal of helping the country rebuild macroeconomic resilience, stabilise its external finances, broaden the tax base, and reform state-owned enterprises. According to the IMF, initial policy implementation showed progress, with Pakistan achieving improved fiscal discipline, a primary surplus, falling inflation, and strengthening reserves.

The IMF holds periodic reviews to assess Pakistan's compliance with the structural benchmarks. After a successful review, the Fund disburses the loan tranche.

Recently, Pakistan introduced new rules that mandate public officials in grades 17 and above to disclose their assets as part of its commitment to the IMF.

The government has also assured the Fund of major anti-corruption and governance reforms over the next six to 18 months.

Under the commitments, Pakistan will overhaul its public procurement framework within 12 months by ending preferential treatment for state-owned enterprises, eliminating avenues for direct contracting and mandating use of the e-government procurement system for all transactions.