Pakistan and the International Monetary Fund (IMF) have reached a staff-level agreement on the second review of the $7 billion-plus loan programme. Following the approval of the IMF Executive Board, Pakistan will receive the next tranche of $1.2 billion. Pakistani authorities have assured the Fund of full compliance with the agreed reform commitments under the programme.

According to a statement issued by the IMF on Wednesday, the staff-level agreement was reached under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF). Once approved, Pakistan will receive $1 billion under the EFF and $200 million under the RSF, bringing total disbursements under the current arrangement to around $3.3 billion.

Last week, an IMF mission led by Eva Petrova concluded discussions with Pakistani officials in Islamabad regarding the second review of the EFF and the first review of the RSF. These programmes were introduced in 2024 to help stabilize Pakistan's economy following a severe financial crisis.

Although no formal agreement was signed at the time of the mission's departure, the IMF stated that significant progress had been made toward reaching an understanding. A day earlier, Finance Minister Muhammad Aurangzeb had also expressed optimism that the agreement would be finalized within the week.

Eva Petrova noted that the staff-level agreement is still subject to approval by the IMF Executive Board, adding that Pakistan's economic reform programme, supported by the EFF,“continues to strengthen stability and restore market confidence.”

She said Pakistan's economic recovery remains on the right track. During the fiscal year 2024–25, the current account recorded a surplus for the first time in 14 years, the fiscal deficit remained below target, inflation declined, and foreign exchange reserves improved. Moreover, a reduction in sovereign bond spreads has helped improve financial conditions.

However, Petrova cautioned that the recent floods have adversely affected the agricultural sector and overall economy, with GDP growth for FY 2025–26 projected between 3.25% and 3.5%.

“These floods are a stark reminder of Pakistan's vulnerability to natural disasters and climate risks,” she said, emphasizing the need to enhance climate resilience.

Petrova expressed sympathy for the flood-affected communities and thanked Pakistani authorities, the private sector, and development partners for their strong cooperation during the negotiations.

She added that Pakistani authorities have reaffirmed their commitment to the continuation of the EFF and RSF programmes, along with fiscal discipline and structural reforms aimed at ensuring long-term economic stability.

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