The International Monetary Fund (IMF) Executive Board has approved a $1.29 billion loan disbursement for Pakistan, following the staff-level agreement (SLA) reached in October 2025 regarding the country’s ongoing loan programmes.
Under the $7 billion Extended Fund Facility (EFF), Pakistan will receive over $1 billion. This includes the first tranche of over $200 million under a separate $1.3 billion Rapid Financing Instrument (RFI). The release brings the total disbursement from both programmes to $3.3 billion.
IMF Commends Implementation but Highlights Critical Risks
The IMF described Pakistan’s programme implementation as “strong” and assured continued support for economic reforms. The board also approved the second economic review of the programme.
Read: IMF Report Exposes Systemic Corruption Crippling Pakistan’s Economy
However, ahead of the board meeting, the IMF released a Governance and Corruption Diagnostic (GCD) report. The report delivered a stark warning, stating that “persistent corruption and weak institutions” continue to undermine Pakistan’s economic development despite stabilisation under the EFF.
The report outlines severe governance challenges. It states corruption remains a “persistent challenge” with significant adverse impacts on development. Indicators reflect weak control of corruption over time, harming public spending effectiveness, revenue collection, and trust in the legal system.
The report notes Pakistanis are often compelled to make “continuous payments to officials” for basic services. Furthermore, it argues that political and economic elites obstruct development by seizing control of policies and capturing public benefits for personal gain. Funds lost to corruption could otherwise support higher production and national development.
The IMF team, led by Iva Petrova, finalised the SLA after discussions in Karachi, Islamabad, and Washington. Cited priorities include sustaining fiscal discipline while supporting vulnerable households. Other goals include maintaining inflation within the State Bank of Pakistan’s target range, restoring the energy sector’s viability, and advancing structural reforms.
The Fund also noted progress on the Resilience and Sustainability Facility (RSF) climate agenda. It emphasised that recent floods underscore the urgent need for comprehensive reforms to mitigate climate risks. This approval provides crucial foreign exchange support but comes with a clear message: long-term stability requires tackling deep-seated governance issues.
