What happened

Pakistani authorities and the International Monetary Fund (IMF) have reached a staff-level agreement on the fourth review of the $7 billion Extended Fund Facility (EFF) and the third review of the $1.4 billion Resilience and Sustainability Facility (RSF), according to Dawn. Pending approval from the IMF Executive Board, Pakistan will qualify to draw approximately $1.2 billion in funding within four to five weeks. The two sides also concluded their Article IV consultations.

Key facts

According to Dawn, key economic metrics and details from the agreement include:

  • Disbursement Breakdown: Approval will release roughly $1 billion under the EFF and about $210 million under the RSF, bringing total disbursements under both programs to nearly $5.7 billion.
  • IMF Mission: An IMF team led by Iva Petrova conducted discussions in Pakistan from September 23 to October 7.
  • Growth and Inflation: Real GDP growth reached 4 percent in the first three quarters of FY26, with full FY26 growth estimated at 3.6 percent. Headline inflation slowed to around 10.3 percent in September.
  • External Position: Strong remittances kept the current account broadly balanced in FY26, while gross foreign exchange reserves rose to about $21.5 billion by the end of September.

Why it matters

The IMF reported that economic stability was preserved despite external impacts from the conflict in the Middle East. However, the agency warned that risks remain significant due to geopolitical tensions, trade disruptions, volatile energy prices, and tighter financial conditions worldwide.

To sustain progress, the IMF emphasized maintaining sound macroeconomic policies. Priorities include implementing the FY27 budget anchored by an underlying primary surplus of 2 percent of GDP, reforming revenue administration, adjusting energy tariffs in a timely manner, and ensuring exchange rate flexibility. The IMF also advised phasing out the high-cost fuel support scheme promptly. On social protection, health and education spending grew from 2.2 percent of GDP in FY24 to 2.5 percent in FY26, with official plans to increase it further to 2.8 percent in FY27.

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Source: Dawn - Home · Published October 08, 2026 · Photo by Brett Jordan on Unsplash