Pakistan’s Economic Stabilisation: IMF Signals Positive Trajectory
The International Monetary Fund (IMF) has affirmed that policy efforts undertaken by Pakistan under its Extended Fund Facility (EFF) are yielding positive results, contributing to economic stabilisation and a restoration of confidence. This assessment, delivered by IMF Communications Director Julie Kozack during a recent press briefing, marks a significant moment in Pakistan’s ongoing economic recovery.
Fiscal Performance and Key Economic Indicators
Pakistan’s fiscal performance has been notably strong, achieving a primary fiscal surplus of 1.3 per cent of GDP, aligning with the targets set under the EFF. The country has recorded its first current account surplus in 14 years during fiscal year 2025. Headline inflation has also remained relatively contained.
Upcoming IMF Review and Facility Details
An IMF staff team is scheduled to visit Pakistan starting February 25th to conduct the third review under the EFF and the second review under the Resilience and Sustainability Facility (RSF). This review will be crucial in determining the release of further funding. The EFF, designed to address medium-term balance-of-payments problems and structural weaknesses, is a longer-term lending programme.
Governance and Reform Proposals
The IMF’s recent Governance and Corruption Diagnostic report for Pakistan highlights the need for key reforms. These include simplifying tax policy, ensuring fair competition in public procurement, and increasing transparency in asset declarations. These measures are intended to strengthen Pakistan’s economic foundations and promote sustainable growth.
Potential Disbursement and Budget Discussions
Successful completion of the current review could unlock approximately $1 billion (760 million Special Drawing Rights) under the EFF and an additional $200 million under the RSF by the conclude of April. The upcoming IMF visit will also focus on discussions regarding budget proposals for the fiscal year 2026-27, with particular attention to provincial finances. A recent court ruling in favour of the government regarding a super tax is expected to help address a revenue shortfall.
Pakistan’s Long-Standing Relationship with the IMF
Pakistan has a long history of engagement with the IMF, having had 25 arrangements since becoming a member on July 11, 1950. As of December 31, 2025, outstanding purchases and loans totalled 7263 million SDR.
Frequently Asked Questions
What is the Extended Fund Facility (EFF)?
The EFF provides financial assistance to countries facing serious medium-term balance of payments problems due to structural issues.
What is the Resilience and Sustainability Facility (RSF)?
The RSF supports countries’ efforts to reduce vulnerabilities to natural disasters.
What is a Special Drawing Right (SDR)?
An SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries.
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