IMF approves $1.2 billion tranche as Pakistan agrees to new conditions

The International Monetary Fund (IMF) has approved the release of $1.2 billion in loan tranches for Pakistan after the country agreed to implement a fresh set of policy conditions and reaffirmed its commitment to existing economic stabilisation targets.

According to officials, the approval brings Pakistan’s total IMF disbursements to $4.5 billion under two ongoing financing arrangements worth $8.4 billion. The latest release includes $1 billion under the Extended Fund Facility and $200 million under the Resilience and Sustainability Facility, expected to be transferred early next week. The inflows are projected to boost Pakistan’s foreign exchange reserves to above $17 billion.

The IMF executive board also approved a revision of performance benchmarks, including adjustments to the State Bank of Pakistan’s net international reserves target, alongside new targets for December 2026 and June 2027.

Pakistan’s government confirmed it had accepted nearly a dozen additional conditions, including continued fiscal discipline, energy tariff adjustments, and structural reforms in taxation, governance, and special economic zones. Officials said the country had pledged to maintain a strict primary surplus target of Rs3.4 trillion despite concerns about rising unemployment, inflationary pressure, and slowing growth.

Finance minister says petrol price decision rests with petroleum ministry

The IMF noted that Pakistan met most end-December 2025 performance criteria, including fiscal balance and reserve accumulation targets, though the Federal Board of Revenue fell short of tax collection goals, particularly from retail income taxes. Authorities responded by increasing petroleum levy rates and promising stronger enforcement measures.

Structural reforms agreed with the IMF include amendments to laws governing special economic and technology zones, the phasing out of tax incentives by 2035, and restrictions on domestic sales by export processing zones to curb tax evasion.

Finance Minister Muhammad Aurangzeb reiterated that Pakistan remains committed to macroeconomic stability and reforms aimed at long-term sustainable growth, while officials said the programme also helps cushion external shocks, including geopolitical tensions in the Middle East.