The International Monetary Fund (IMF) has approved a financial package of $2.4 billion for Pakistan, which includes $1 billion under the Extended Fund Facility (EFF) and a new $1.4 billion Resilience and Sustainability Facility (RSF) aimed at addressing climate-related challenges.
This decision followed Pakistan’s efforts to meet the IMF’s stringent conditions, including economic reforms and fiscal improvements. The funding will allow Pakistan to bolster its foreign exchange reserves, which are expected to rise to $11 billion. These measures are intended to stabilize the economy and create space for development while addressing debt obligations.
The approval faced resistance, with India reportedly raising concerns during the process by criticizing Pakistan’s reliance on borrowing. However, the IMF Board approved the funds, citing Pakistan’s compliance with the conditions necessary to qualify for the loans. Key reforms include introducing a carbon levy, improving water resource management, and making the economy more open to foreign investment.
The funds will be disbursed over a period of time, with $1 billion available immediately while the remaining amount is spread over 28 months. The financial relief is accompanied by commitments to maintain economic discipline, cut public spending, and prioritize climate adaptation projects to mitigate risks from natural disasters.
Looking ahead, the IMF projects economic growth of 2.6% for Pakistan in the current fiscal year and 3% for the next. Inflation rates are forecast to decrease, with efforts underway to further strengthen the country’s fiscal stability.
