Muhammad Amanullah
Date: October 8, 2026 The True Post (Web News) —Pakistan and the International Monetary Fund (IMF) have reached a staff-level agreement covering a total of $1.21 billion under two programmes. The development will provide Pakistan with additional financial resources to support economic stability, while the IMF has emphasised the need to continue reforms and maintain fiscal discipline.
$1 Billion Under the Extended Fund Facility
Under the fourth review of the Extended Fund Facility (EFF), Pakistan will receive $1 billion, while a further $210 million will be provided under the Resilience and Sustainability Facility (RSF).
The total financial assistance available under the two programmes will increase to $5.7 billion.
Economic Stability
According to the IMF, Pakistan has made progress in maintaining overall economic stability despite difficult global and regional conditions and the conflict in the Middle East.
The Fund said Pakistan’s economic growth rate stood at 4 per cent during the first nine months of 2026, while growth for the full year is estimated at 3.6 per cent.
Inflation Declines
According to the IMF, inflation has also declined after reaching a high level. Following its peak in May, inflation fell to 10.3 per cent in September.
In its assessment of the economic situation, the Fund identified inflation, energy prices and global conditions as important factors that will influence the outlook.
Foreign Exchange Reserves
Pakistan’s current account also remained balanced, supported by strong growth in remittances. According to the IMF, the country’s foreign exchange reserves reached $21.5 billion by the end of September.
An improvement in Pakistan’s sovereign credit rating and its renewed access to international financial markets were also described as signs of confidence in the country’s economic policies.
Major Risks
The IMF also identified several risks facing Pakistan’s economy. Geopolitical tensions, fluctuations in energy prices, tighter global financial conditions and trade barriers were described as major challenges.
According to the Fund, continuing economic reforms will be essential to maintaining stability under these circumstances.
Fiscal Discipline
The IMF has urged Pakistan to maintain fiscal discipline and meet the target of a primary surplus equivalent to 2 per cent of gross domestic product (GDP) in the fiscal year 2027 budget.
The Fund also stressed the need to make the tax system simpler, more effective and more business-friendly.
Changes to the Tax System
According to the IMF, Pakistan needs to expand the use of modern technology in tax collection. The Fund has called for broader use of digital invoicing, tax audits and third-party data.
It maintains that improvements to the tax system could increase government revenue while also helping bring more economic activity into the documented economy.
Health and Education
The IMF has also identified increased spending on health and education as an important priority.
According to the document, combined expenditure on health and education stood at 2.2 per cent of GDP in fiscal year 2024. This has been increased to 2.5 per cent of GDP in the current fiscal year.
The target is to raise these expenditures to 2.8 per cent of GDP in fiscal year 2027.
Low-Income Groups
The IMF has proposed increasing cash assistance for low-income groups to protect vulnerable people during the implementation of economic reforms.
At the same time, the Fund has urged Pakistan to phase out broad-based fuel subsidies as soon as possible. It has recommended that if oil prices rise exceptionally in the future, assistance should be restricted to eligible and vulnerable groups.
Interest Rates and the Rupee
The State Bank of Pakistan has been advised to maintain an appropriately tight monetary policy to bring inflation back within its target range.
The IMF has also emphasised the importance of maintaining flexibility in the rupee’s exchange rate and further increasing foreign exchange reserves.
Energy Sector
Reforms in the energy sector remain an important part of the IMF programme. Timely adjustments to electricity and gas tariffs, preventing the accumulation of circular debt and involving the private sector in the electricity distribution system have been identified as necessary measures.
The Fund has also stressed the need to increase competition in the energy sector and reduce gas losses.
Privatisation and Investment
The IMF has emphasised the need to improve the performance and transparency of state-owned enterprises while advancing the privatisation process.
According to the Fund, stronger business competition, fewer trade and regulatory barriers, institutional measures to combat corruption and greater private investment could further strengthen economic activity.
Focus on Exports
The IMF has instructed Pakistan to continue taking measures to promote private investment and exports. According to the Fund, improving the business environment and removing unnecessary obstacles could create additional opportunities for the private sector.
Call to Continue Reforms
According to the IMF, Pakistan has made overall progress towards economic stability. However, inflation, energy prices, debt and global and regional uncertainty make continued reforms essential.
The new staff-level agreement providing $1.21 billion in financial assistance represents an important development for Pakistan. However, the IMF has made clear that implementing targets related to fiscal discipline, tax reforms, energy-sector changes, social protection and the promotion of private investment will be fundamental to maintaining economic stability.
