Pakistan has successfully obtained initial approval from the International Monetary Fund (IMF) for a $1.2 billion financial package, offering a crucial boost to its struggling economy and climate recovery efforts.
According to the IMF statement, the agreement covers two components — $1 billion under the Extended Fund Facility (EFF) and $200 million through the Resilience and Sustainability Facility (RSF), which supports the country’s ongoing climate reform initiatives.
The deal now awaits final approval from the IMF Executive Board in Washington.
💰 Financial Lifeline Amid Flood Aftermath
The IMF’s preliminary approval comes as Pakistan faces severe economic pressure following devastating monsoon floods that destroyed vast farmlands, displaced nearly 7 million people, and claimed over 1,000 lives.
The IMF review mission projected Pakistan’s GDP growth between 3.25% and 3.5% for the fiscal year ending June 2026 — slightly below the earlier 3.6% forecast due to the flood-related losses.
🌍 Climate Change and Reconstruction Challenges
The IMF and Pakistani authorities highlighted that climate change continues to intensify South Asia’s monsoon patterns, creating urgent needs for reconstruction funding and climate adaptation support.
“The government remains committed to maintaining fiscal discipline while providing direct support to flood-affected families,” the IMF stated.
The global lender also noted that temporary inflation spikes could occur because of supply disruptions, but assured that Pakistan’s central bank is ready to take timely monetary action to maintain price stability and market confidence.
🤝 IMF Mission and Ongoing Negotiations
This agreement follows productive discussions between Pakistan’s economic team and an IMF delegation led by Iva Petrova, which visited Islamabad and Karachi from September 24 to October 8, 2025.
The mission reviewed the country’s reform progress, budgetary measures, and climate financing framework, setting the stage for the next round of approvals.
