IMF Executive Board to approve $1B loan tranche for Pakistan in December

The International Monetary Fund (IMF) Executive Board is expected to approve the third tranche of $1 billion under Pakistan’s ongoing loan program in December 2025, alongside an additional $200 million in climate resilience financing, according to informed sources.

Sources said the IMF Board meeting is likely to be held in the second week of December, following the completion of staff-level discussions between the IMF team and Pakistani authorities.

A governance and corruption report — a key prerequisite for Board consideration — will be released ahead of the meeting. Comprehensive talks on the report have already taken place, with both sides working to resolve outstanding technical issues.

The staff-level agreement follows the IMF’s successful completion of the second review of Pakistan’s loan program and the first review under the Resilience and Sustainability Facility (RSF). The upcoming Board meeting will formally approve the disbursement of both the $1 billion tranche and the $200 million in climate-related support.

According to sources, the IMF is also assessing the economic impact of recent floods in Pakistan, which are estimated to have shaved around 0.5 percent off the country’s GDP growth rate. The floods are expected to weigh on tax revenues as well, though the Fund has decided not to revise macroeconomic targets until final damage assessments are completed.

The IMF has asked Pakistan to submit updated macroeconomic data reflecting the post-flood situation and has voiced concern over a potential decline in agricultural output due to flood damage.

For the current fiscal year, the IMF projects Pakistan’s GDP growth to remain between 3.25 and 3.5 percent. It also believes the Federal Board of Revenue’s (FBR) tax collection targets may need upward revision in light of potential shortfalls. Pakistani authorities have assured the Fund that corrective measures will be implemented if revenue targets are missed.

A revised tax plan is being prepared and will soon be shared with the IMF, sources confirmed. The Fund has also projected that Pakistan’s current account deficit could widen during the fiscal year and may reach around 1 percent of GDP within five years.

Meanwhile, sources added that the implementation of an agricultural income tax at the provincial level is expected to begin next year as part of broader fiscal reforms supported by the IMF.