Pakistan Gets $1.2bn IMF Boost Amid Reform Push

Photo : Collected

Pakistan has welcomed the release of an additional $1.2 billion from the International Monetary Fund, saying the approval reflects the “hard work” undertaken to stabilise the economy after two years of financial turmoil.

The IMF’s decision, made at a meeting in Washington on Monday, brings Pakistan’s total receipts under two loan arrangements — the bailout programme and the climate sustainability fund — to $3.3 billion.

IMF Deputy Managing Director Nigel Clarke said Pakistan’s ongoing reforms have helped maintain macroeconomic stability despite multiple recent shocks, including last year’s devastating floods.
He projected economic growth to reach 3.2 percent in the fiscal year ending June 2026, up from an estimated 3.0 percent last year. Inflation is expected to average 6.3 percent this year, a sharp decline from 23.4 percent in the year to June 2024.

However, Clarke stressed the need for deeper structural reforms, including privatisation of state-owned enterprises and increased investment in climate resilience to reduce vulnerability to extreme weather.
He also called for renewed efforts to address entrenched corruption, describing a recent government-commissioned fraud report as a positive step towards accelerating governance reforms.

Prime Minister Shehbaz Sharif welcomed the IMF approval, describing the funds as “proof that Pakistan is implementing the necessary steps for economic stability and growth”.
He said the effort to steer the country away from the brink of default in 2023 required “difficult sacrifices” across society.

Pakistan narrowly avoided default last year after securing an IMF rescue package under the Extended Fund Facility, which is expected to total $7 billion in the coming years. The programme also obliges Pakistan to strengthen measures against corruption, money laundering and terror financing.

In November, an IMF review requested by the Pakistani government found “persistent and widespread corruption risks” within a heavily state-dominated economy. It warned of serious impacts on investment, growth and public confidence, urging stronger rule-of-law initiatives and improved performance of anticorruption institutions.

Pakistan remains one of the IMF’s largest borrowers after Argentina and Ukraine. It also secured a 10-year, $20 billion financing package from the World Bank earlier this year.