IMF Reaches Staff-Level Agreement with Pakistan

The International Monetary Fund (IMF) announced on October 15 that it has reached a staff-level agreement with Pakistan. Once this agreement receives approval from the IMF's Executive Board, Pakistan will receive a total of $1.2 billion in loans.

The funding consists of $1 billion through the Extended Fund Facility (EFF) and $200 million through the Resilience and Sustainability Facility (RSF). Total disbursements through both programs are expected to reach approximately $3.3 billion.

In a statement, the IMF said, "Pakistan's economic program, supported by the EFF, is solidifying macroeconomic stability and rebuilding market confidence."

Pakistani Economy Maintains Recovery Trajectory

The IMF stated that the South Asian nation's economic recovery is proceeding as scheduled. Key indicators show:

• Prices: Inflation is being managed stably
• Foreign Exchange Reserves: External buffers are strengthening
• Financial Conditions: Financial conditions are improving with significantly narrowed sovereign bond spreads

The Pakistani government has committed to maintaining appropriately tight and data-driven monetary policy. It is also pursuing measures to enhance climate resilience in consideration of recent major flood damage.

Preparing for Capital Market Return... Green Bond Issuance Planned

Pakistani Finance Minister Muhammad Aurangzeb stated in an interview that the government is planning to return to capital markets.

As a first step, it plans to issue Chinese yuan-denominated green bonds before year-end. This will be followed by plans to issue international bonds worth at least $1 billion.

Recovering from 2024 Crisis

IMF support began in September 2024. At that time, Pakistan was experiencing a severe economic crisis with its currency plummeting, dealing a major blow to the $370 billion GDP economy.

The IMF program is functioning as a key mechanism supporting Pakistan's economy. Countries receiving IMF loan programs must pass regular reviews, and loans are disbursed in stages once approved by the IMF Executive Board.