Pakistan and International Monetary Fund staff have reached a staff-level agreement on the fourth review of the country's Extended Fund Facility and the third review of its Resilience and Sustainability Facility, potentially making about $1.21 billion in financing available after approval by the IMF Executive Board.
The agreement, announced on October 7, follows discussions held in Karachi and Islamabad from September 23 to October 7. It marks a new stage in Pakistan's IMF programme after negotiations had previously advanced to the Memorandum of Economic and Financial Policies, or MEFP, stage without a staff-level agreement. Origin Pakistan previously reported on the MEFP-stage negotiations and the energy reforms under discussion.
Reuters reported the agreement as a step towards unlocking financing under two existing IMF arrangements. The funds remain subject to a formal Executive Board decision.
How the $1.21 billion financing is divided
If the IMF Executive Board approves the reviews, Pakistan will gain access to about $1 billion, equivalent to SDR 760 million, under the Extended Fund Facility, or EFF. A further $210 million, equivalent to approximately SDR 154 million, would become available under the Resilience and Sustainability Facility, or RSF.
According to the IMF mission's October 7 statement, reproduced by Business Recorder, cumulative disbursements under the two arrangements would reach approximately $5.7 billion following approval of the latest reviews.
The EFF is Pakistan's 37-month economic reform arrangement approved in September 2024. The RSF, approved in May 2025 for 28 months, supports reforms intended to strengthen the country's resilience to climate-related and other long-term vulnerabilities.
The $1.21 billion therefore combines financing associated with two separate existing programmes. It is not a new standalone IMF bailout or an amount drawn entirely from the EFF.
The IMF's earlier programme documentation sets out the scheduled EFF purchases and RSF disbursements associated with successive reviews.
What changed after the latest IMF negotiations?
The latest announcement moves Pakistan beyond the MEFP negotiation stage and towards formal consideration of the reviews by the IMF Executive Board.
An IMF team led by Iva Petrova held discussions with Pakistani authorities on the fourth EFF review, third RSF review and 2026 Article IV consultation. The Article IV consultation forms part of the Fund's broader assessment of Pakistan's economic policies and outlook.
Reaching a staff-level agreement is a significant procedural milestone. It indicates agreement between IMF staff and the authorities on the reviews, while the Executive Board retains responsibility for the formal approval decision.
For Pakistan, the immediate significance is that the review process has advanced. The announcement does not itself establish that the proposed financing has been transferred into the country's reserves.
What the IMF's latest assessment says about Pakistan
The IMF said Pakistan's economic programme remained broadly on track despite the difficult external environment created by the Middle East conflict, higher energy costs and supply disruptions.
Real GDP growth reached 4% during the first three quarters of FY26, while the Fund estimated growth for the full fiscal year at 3.6%. The figures refer to different periods and should not be treated as competing full-year estimates.
Headline inflation moderated to approximately 10.3% in September after peaking in May. The IMF also described the FY26 current account as broadly balanced, supported by strong remittances.
Gross reserves reached approximately $21.5 billion by the end of September, according to the Fund's assessment. This is a gross reserve measure rather than an estimate of funds freely available for immediate government spending.
The Fund nevertheless warned that geopolitical tensions, volatile energy prices, tighter global financial conditions and trade disruptions continued to pose risks to Pakistan's outlook.
Fiscal and energy reforms remain part of the programme
The staff-level agreement does not conclude Pakistan's wider reform commitments. Fiscal discipline, tax administration, energy-sector sustainability and support for vulnerable households remain central to the IMF-supported programme.
Under the programme framework, Pakistan is targeting an underlying primary surplus of 2% of GDP in FY27. The primary balance excludes interest payments, so this target should not be confused with an overall budget surplus.
The IMF also continues to emphasise stronger tax administration, including risk-based audits, digital invoicing and greater use of third-party information to improve compliance.
In the energy sector, priorities include preventing renewed circular debt accumulation, improving efficiency and maintaining financially sustainable electricity and gas services. The Fund's broader reform agenda also calls for better-targeted support for vulnerable consumers.
These are continuing programme priorities. The October agreement does not, by itself, establish a specific new tax rate or an immediate change in petrol or electricity prices.
Why the climate financing is separate
The approximately $210 million associated with the RSF is linked to Pakistan's climate resilience and sustainability reform agenda.
The IMF's latest assessment identifies progress in incorporating climate considerations into public investment planning and strengthening disaster-risk financing and coordination.
Further priorities include irrigation-water pricing and collection, better-targeted electricity subsidies, energy-efficiency standards and transport decarbonisation.
Unlike the EFF's broader macroeconomic stabilisation role, the RSF is designed to support longer-term reforms addressing climate-related economic vulnerabilities. Both arrangements are being reviewed together, but their policy objectives remain distinct.
What happens before Pakistan can receive the money?
The immediate next step is consideration of the fourth EFF and third RSF reviews by the IMF Executive Board. No approval of these latest reviews had been established as of October 8.
The Fund's May 2026 Executive Board announcement illustrates how the process works. At that time, the Board completed Pakistan's previous EFF and RSF reviews, allowing the associated financing to become available.
The October staff-level agreement represents another important milestone in that process. It brings Pakistan closer to accessing approximately $1.21 billion under existing IMF arrangements while leaving the final decision with the Executive Board.
Beyond the financing, the Fund's latest assessment points to an economy that has strengthened in several areas but remains exposed to external shocks and unfinished reforms. The agreement advances Pakistan's IMF programme without bringing those longer-term challenges to an end.
