Pakistan has reached a staff-level agreement with the International Monetary Fund (IMF) to release $1.2 billion from the bailout package the global agency approved last year.
The IMF had approved a $7 billion bailout package in July 2024 aimed at preventing Pakistan from defaulting on its loan payments amid a weakening economy.
Pakistani media reported the agreement on Wednesday, which followed several days of talks in Islamabad. In a statement overnight, the IMF confirmed the development.
According to the IMF, Pakistan's economic program contributes to anchoring macroeconomic stability and restoring market confidence.
Last week, an IMF mission led by Iva Petrova concluded talks with Pakistani authorities on the second review of the EFF agreed in 2024 and the first review of the RSF climate loan agreed this year, but Pakistan left the country without signing a staff-level agreement.
How much money does Pakistan get?
Under the agreement, the Washington-based IMF will provide Pakistan with $1 billion under its Extended Fund Facility (EFF).
Islamabad will receive another $200 million from the IMF under its Resilience and Sustainability Facility (RSF).
Both grants are subject to approval by the IMF board.
What did the IMF say?
In a statement issued early Wednesday, Iva Petrova said the staff-level agreement to release IMF funds to Pakistan remains subject to approval by the IMF Board of Governors.
“Supported by the EFF, Pakistan's economic program is anchoring macroeconomic stability and restoring market confidence,” she said.
“The recovery remains on track, with the current account showing a surplus for FY25 – the first in fourteen years, with the primary budget balance exceeding the program target, inflation remaining under control, external buffers strengthening and financial conditions improving as government bond spreads have narrowed significantly,” she said.
However, she added that the recent floods had weighed on the country's prospects, especially that of the agricultural sector, causing the projected gross domestic product (GDP) for FY26 to fall to around 3.25 to 3.5 percent.
The bailout package for Pakistan was strongly opposed by India given the then-conflict with Islamabad, with New Delhi claiming the money will be used to build terror infrastructure. Explaining the reasons behind the approval, the IMF said in May that the aid was granted after its board found that Pakistan had met all conditions and objectives.
IMF conditions for Pakistan
Earlier this year, the IMF had imposed 11 conditions on Pakistan for approving the package.
Under this, Pakistan must adopt a new federal budget for the financial year 2025-2026 in line with the IMF's targets by June 2025.
The international body has also imposed another condition under which four units will be implemented through the agricultural income tax laws.
Among other measures, the Pakistani government is also directed to publish a governance action plan, based on the recommendations of the IMF's Governance Diagnostic Assessment, to identify reform measures
