WEBDESK: The International Monetary Fund’s (IMF) Executive Board is set to meet on May 9, 2025 to discuss the disbursement of a $1.1 billion IMF loan tranche to Pakistan. During this meeting, the board will review Pakistan’s economic performance and decide whether to approve a $1.1 billion disbursement under the existing loan program.
The announcement of the IMF board meeting had a positive impact on Pakistan’s stock market, which saw a slight recovery of 135 points following an initial dip of 500 points.
The IMF’s agreement includes climate financing worth $1.3 billion, as well as an additional 28-month programme, which will bring the total financial support to Pakistan to $2.3 billion.
Finance Minister Muhammad Aurangzeb recently confirmed that the country has completed all necessary steps to qualify for the next IMF loan tranche. The approval is part of the final review under the $3 billion Stand-By Arrangement agreed with the IMF in 2023. If approved, this will help Pakistan strengthen its foreign reserves and stabilise the economy.
In addition to the current program, Pakistan is also likely to start a new agreement with the IMF under the Resilience and Sustainability Facility (RSF). This facility is expected to bring in an additional $1.3 billion IMF loan and will focus on supporting Pakistan’s efforts in climate resilience and sustainable development.
Pakistan and the IMF had reached a three-year, $7bn aid package deal in July 2024, with the new programme set to allow the country to “cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth”.
The ongoing 37-month Extended Fund Facility (EFF) programme consists of six reviews over the life of the bailout, and the release of the next tranche of approximately $1bn will be contingent on the success of the performance review.
The upcoming IMF loan is seen as a key step for Pakistan’s financial stability. It could also encourage support from other international partners and improve investor confidence. To further boost economic support, Pakistan is planning to increase its currency swap deal with China by an additional 10 billion yuan (about $1.4 billion) and issue its first Panda bond later this year.
In an end-of-mission statement, mission chief Nathan Porter said: “Programme implementation has been strong, and the discussions have made considerable progress in several areas, including the planned fiscal consolidation to durably reduce public debt, maintenance of sufficiently tight monetary policy to maintain low inflation, acceleration of cost-reducing reforms to improve energy sector viability.”
The government is hopeful that the upcoming IMF loan approval will bring much-needed relief and help the country continue on a path of economic recovery. Experts believe this will also help Pakistan handle its external debt and promote long-term growth.
