The International Monetary Fund (IMF) on Friday approved the immediate disbursement of about $1 billion to Pakistan under the ongoing Extended Fund Facility and allowed an additional arrangement for the $1.3bn Resilience and Sustainability Facility (RSF).
The approval of the IMF’s executive board has led to an immediate disbursement of $1bn, bringing total disbursements under the loan programme to about $2bn. On successful completion of seven half-yearly reviews, Pakistan is entitled to seven equal instalments of about $1bn (SDR 760 million) under the loan programme.
Pakistan and the IMF had reached a three-year, $7bn aid package deal in July, with the new programme set to allow the country to “cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth”.
The two sides had reached a staff-level agreement on March 25 on the first biannual review of the 39-month $7bn loan programme, agreeing on a series of reforms including the introduction of a carbon levy, timely revisions to electricity tariffs, increased water pricing and liberalisation of the automobile sector.
The staff-level agreement also entailed a new 28-month RSF arrangement, providing total access to around $1.3bn (1bn special drawing rights, or SDRs).
This takes the combined size of the IMF support to about $8.3bn. The additional RSF financing, unlike the bailout package’s biannual review and disbursement schedule, is subject to disbursement on completion of specific projects and policy actions to build climate resilience.
The board approval would be soon followed by another IMF mission visiting Pakistan to finalise the 2025-26 budget to be presented in the National Assembly in the first week of June.
The implementation of major reforms — including the carbon levy, water pricing and automobile protectionism — would begin gradually from July 1.
The overall ongoing fiscal consolidation will continue in the coming budget through a reduction in energy subsidies and tight development spending.
More to follow
