ISLAMABAD: The International Monetary Fund (IMF) and Pakistani authorities have reached a staff-level agreement on the first review under Pakistan’s Extended Fund Facility (EFF) and on a new arrangement under the Resilience and Sustainability Facility (RSF).
An IMF team, led by Nathan Porter, held discussions during a February 24 to March 14, 2025 mission visit to Karachi and Islamabad, and virtually thereafter, for the first review of Pakistan’s economic programme supported by the Extended Fund Facility (EFF) and on a new arrangement under the IMF’s Resilience and Sustainability Facility (RSF).
The IMF team has reached a staff-level agreement (SLA) with the Pakistani authorities on the first review of the 37-month Extended Arrangement under the Extended Fund Facility (EFF), and on a new 28-month arrangement under the IMF’s RSF with total access of around $1.3 billion (SDR 1 billion).
The staff-level agreement is subject to approval of the IMF’s Executive Board. Upon approval, Pakistan will have access to about US$1.0 billion (SDR 760 million) under the EFF, bringing total disbursements under the programme to about US$2.0 billion.
MACROECONOMIC STABILITY
Over the past 18 months, Pakistan has made significant progress in restoring macroeconomic stability and rebuilding confidence despite a challenging global environment. While economic growth remains moderate, inflation has declined to its lowest level since 2015, financial conditions have improved, sovereign spreads have narrowed significantly, and external balances are stronger.
While economic activity is expected to steadily improve, downside risks also remain elevated. Potential macroeconomic policy slippages — driven by pressures to ease policies — along with geopolitical shocks to commodity prices, tightening global financial conditions, or rising protectionism could undermine the hard-won macroeconomic stability.
Additionally, climate-related risks continue to pose a significant challenge for Pakistan, creating a need to build resilience including through adaptation measures.
In this regard, it is critical to stay the course and entrench the progress achieved over the past one and a half years, building resilience by further strengthening public finances, ensuring price stability, rebuilding external buffers and eliminating distortions in support of stronger, inclusive and sustained private sector-led growth.
The authorities reiterated their commitment to the EFF-supported programme and plan to supplement their efforts by advancing reforms under the RSF-supported programme aiming to address long standing economic vulnerabilities to climate shocks and build resilience.
PAKISTAN’S ASSURANCE TO LENDER
Finance Minister Muhammad Aurangzeb expressed his firm commitment to strictly adhere to the IMF programme.
Speaking to a TV channel, he pledged to continue reforms in taxes, energy and government institutions.
“We are determined to put the country on the path of productive and export-oriented growth,” he said.
PSX GETS BOOST
Hours after the International Monetary Fund (IMF) staff and the Pakistani authorities reached a staff-level agreement on the first review under Pakistan’s Extended Fund Facility (EFF) and on a new arrangement under the Resilience and Sustainability Facility (RSF), the Pakistan Stock Exchange (PSX) gained momentum.
The benchmark KSE-100 Index gained more than 1,300 points during the opening hours of trade on Wednesday.
The bulls rallied swiftly following the staff-level agreement with global lender, with the KSE-100 Index hovering at 118,220 points.
According to market analysts, a recent research conducted by the Oil and Gas Development Company (OGDC) and the Pakistan Petroleum Limited (PPL) over the feasibility of the Reko Diq project in Balochistan also sent positive signals to the investors.
