Pakistan’s economic stabilisation efforts are gaining traction, according to the International Monetary Fund (IMF), paving the way for a potential $1 billion disbursement in April. The assessment comes as an IMF team prepares to visit Pakistan starting to conduct the third review under the Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF).
Julie Kozack, Director of the IMF’s Communications Department, stated on that policy measures undertaken by Pakistan have “helped stabilise the economy and rebuild confidence.” This positive assessment is crucial as Pakistan navigates a challenging economic landscape and seeks to maintain momentum on its reform agenda.
The IMF’s review will focus on the implementation of the $7 billion EFF and the $1.1 billion RSF facilities, both designed to address Pakistan’s economic vulnerabilities and promote sustainable growth. A key component of the upcoming visit will be a detailed examination of budget proposals for the fiscal year , with particular attention paid to the financial plans of Pakistan’s provinces.
Fiscal Performance and Inflation
Kozack highlighted Pakistan’s “strong” fiscal performance, noting a primary fiscal surplus of 1.3 percent of Gross Domestic Product (GDP) that aligns with the targets set under the IMF program. This surplus indicates the government’s success in managing its finances and controlling spending. The IMF noted that headline inflation has been “relatively contained,” a significant achievement given the global inflationary pressures experienced in recent years.
Perhaps most notably, Pakistan recorded its first current account surplus in 14 years during fiscal year 2025. This surplus signifies an improvement in Pakistan’s balance of payments, reducing its reliance on external financing and bolstering its foreign exchange reserves. The current account surplus is a key indicator of economic health, reflecting a positive balance between a country’s exports and imports.
Governance and Corruption Reforms
Beyond the immediate fiscal and monetary indicators, the IMF is also emphasizing the importance of structural reforms to address long-standing governance and corruption challenges. The IMF recently released a Governance and Corruption Diagnostic report for Pakistan, outlining proposals to simplify tax policy, ensure fair public procurement processes, and increase transparency in asset declarations. These reforms are intended to create a more level playing field for businesses, attract investment, and improve the efficiency of public services.
The report’s recommendations include streamlining tax regulations to reduce complexity and opportunities for evasion, establishing transparent and competitive bidding processes for government contracts, and requiring greater disclosure of assets by public officials. Implementing these reforms will be critical for fostering a more accountable and transparent economic system in Pakistan.
Revenue Shortfall and Legal Victory
While the overall program performance through December 2025 has largely met expectations, authorities have acknowledged a recent revenue shortfall. However, a recent ruling by the Federal Constitutional Court in favor of the government regarding a “super tax” is expected to mitigate this shortfall. The super tax, levied on high-income earners and certain industries, is intended to generate additional revenue for the government.
Disbursement Timeline and Program Details
If the IMF review is successful, Pakistan is poised to receive approximately $1 billion (SDR 760 million) under the EFF and an additional $200 million under the RSF by the end of . This disbursement would provide a much-needed boost to Pakistan’s foreign exchange reserves and support its ongoing economic stabilization efforts.
The EFF is a longer-term IMF lending program designed to help countries address structural economic weaknesses and balance-of-payments problems. The RSF, provides financial assistance to countries facing long-term structural challenges, such as climate change and pandemic preparedness.
The IMF mission, led by Iva Petrova, will remain in Pakistan until , engaging with government officials, business leaders, and other stakeholders to assess the progress of the reform program and discuss future policy priorities. The outcome of this review will be a crucial determinant of Pakistan’s economic trajectory in the coming months and years.
The World Bank has also reaffirmed its commitment to Pakistan, backing its $20 billion, 10-year development commitment to the country, as announced at the AlUla Conference on .
