Pakistan receives $1.2bn tranche from IMF following Executive Board's approval

• SBP says $1.2bn received under IMF’s Extended Fund Facility
• $200m released to Pakistan to combat climate change: SBP
• Says funds to reflect in SBP forex reserves for week ending Dec 12.

ISLAMABAD: Following the International Monetary Fund's (IMF) Executive Board approval, the global lender has transferred $1.2 billion to Pakistan under the Extended Fund Facility, and the climate-focused Res­i­l­ience and Sustainability Facility (RSF), the State Bank of Pakistan (SBP) said in a statement on Thursday.

The central bank said that the amount would be reflected in SBP's foreign exchange reserves for the week ending on Dec 12, 2025.

The global lender, in its meeting held on December 8, had approved $1.2 billion loan for Pakistan after completing the second review of the country's economic reform program under the Extended Fund Facility (EFF) and the first review under the Resilience and Sustainability Facility (RSF).

Following the Executive Board discussion, Deputy Managing Director and Acting Chair Nigel Clarke made the following statement: “Pakistan’s reform implementation under the EFF arrangement has helped preserve macroeconomic stability in the face of several recent shocks. Real GDP growth has accelerated, inflation expectations have remained anchored, and fiscal and external imbalances have continued to moderate. In the face of an uncertain global environment, Pakistan needs to maintain prudent policies to further entrench macroeconomic stability, while accelerating reforms necessary to achieve stronger, private sector-led, and sustainable medium-term growth.

“The authorities’ commitment to the FY2026 primary balance target while accommodating urgent relief needs in response to the recent severe floods is a strong signal of their commitment to build fiscal policy credibility. In parallel, advancing reforms to raise revenues via tax policy simplification and base broadening is key to achieving fiscal sustainability and building the fiscal space necessary to boost climate resilience, social protection, human capital development and public investment.

“An appropriately tight monetary policy stance has been pivotal in reducing inflation and should be maintained to ensure inflation remains anchored within the SBP’s target range. Further improvements in central bank communication will support effective monetary policy implementation. The SBP should continue efforts to deepen the interbank foreign exchange market, while allowing exchange rate flexibility to absorb shocks," the statement added.

It further read: "Decisive financial regulation enforcement is necessary to maintain a sound and adequately capitalised financial sector. At the same time, promoting capital market development will help expand the public and private sectors’ financing options"

“Efforts to advance structural reforms should continue to unlock growth potential and attract high-impact private investment. To this end, the publication of the Governance and Corruption Diagnostic report is a welcome step in accelerating governance reforms. Additional efforts should focus on SOE governance reforms and privatisation, enhancing the business environment and improving economic data and statistics,” read the statement.

Following the loan approval, Prime Minister Shehbaz Sharif had said that the IMF financial announcement highlights Pakistan's progress in implementing the measures necessary for economic stability and growth.

In a statement, he added that the IMF's acknowledgement of the effective execution of economic reforms and initiatives in Pakistan is a clear recognition of the hard work of Finance Minister Muhammad Aurangzeb and his team.