Pakistan received a $1.023 billion tranche from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF) on May 14, 2025, the State Bank of Pakistan (SBP) announced.
The IMF approved $1 billion for the EFF and $1.4 billion for the Resilience and Sustainability Facility (RSF), bringing total EFF disbursements to $2.1 billion. The funds, set to bolster foreign exchange reserves to $13.9 billion by June 2025, reflect Pakistan’s economic stabilisation, which Prime Minister Shehbaz Sharif praised amid tensions with India.
According to an IMF statement, on May 9, 2025, the IMF’s Executive Board completed the first review of Pakistan’s Extended Fund Facility (EFF), releasing $1 billion immediately and approving an additional $1.4 billion for the Resilience and Sustainability Fund (RSF) to enhance climate resilience.
The State Bank of Pakistan (SBP) announced it will reflect the $1.023 billion in reserves for the week ending May 16, up from $10.3 billion in April 2025. SBP expects reserves to reach $17 billion by year-end, though some experts have expressed concerns over the continued reliance on IMF loans.
Economic Progress and Policy
The IMF highlighted Pakistan’s “significant progress” under the EFF. Pakistan achieved a 2% GDP primary surplus in FY25’s first half, on track for a 2.1% year-end target. Inflation dropped to a historic 0.3% in April, enabling the SBP to cut the policy rate by 1,100 basis points since June 2025, fostering growth. The RSF aims to reduce vulnerability to natural disasters, aligning with Pakistan’s climate goals.
Prime Minister Shehbaz Sharif, via a PMO statement, lauded the IMF approval as a sign of economic improvement, rejecting “India’s high-handed tactics” to undermine Pakistan’s progress. He claimed India’s “false propaganda” and “unilateral aggression” failed to derail the IMF program, referencing the May 10 ceasefire after Marka-e-Haq.
The IMF funds strengthen Pakistan’s economic stability, supporting initiatives like Budget 2025’s tax reforms and boosting investor confidence, as seen in the Pakistan Stock Exchange’s recent rally past 120,000 points. However, the RSF’s climate focus underscores Pakistan’s disaster vulnerability, requiring sustained policy efforts.
