ISLAMABAD: Pakistan is poised to get $3.6 billion more from the International Monetary Fund in the coming 14 months, as part of the final disbursements due on the existing two IMF programmes which have been a lifeline for Pakistan’s macroeconomic stability since 2024. While the Pakistan IMF funding $3.6 billion pipeline is dependent on the success of programme reviews and continuation of reform efforts, it is essential for Pakistan’s foreign currency reserves.
According to the programme documents, the aggregate amount of funds provided by IMF to Pakistan through its two programmes is about $8.4 billion, out of which the country has received approximately $4.8 billion and the remaining $3.6 billion still needs to be released.
The structure of the Pakistan IMF funding loan includes two separate lending programs with differing objectives; the Extended Fund Facility, which assists in macroeconomic adjustment and balance of payments support, and the Resilience and Sustainability Facility, which targets vulnerability to climate change and sustainability. Each of these requires that Pakistan meets performance criteria prior to disbursement of each installment.
What Pakistan Must Do to Obtain the Funds
The Pakistan-IMF $3.6 billion funds disbursement schedule does not come without preconditions. All the scheduled disbursements will be dependent on Pakistan fulfilling certain performance criteria and adhering to the structural reforms agenda that has been set out by the IMF. The most important structural reforms for Pakistan are:
- Broadening the tax base: increasing the number of registered tax payers and decreasing the share of informal sector in GDP
- Enhancing tax administration: improving the efficiency of FBR collections and reducing evasion using technology
- Reforming the energy sector: resolving the issue of circular debt that amounts to billions of rupees
- Reducing circular debt: putting into effect measures that will help prevent new circular debt creation
- Reforming the state-owned enterprises: improving governance, cutting down the losses and privatising
- Implementing a prudent fiscal and monetary policy: maintaining primary surplus goals and interest rate management
“Reforms implemented by Pakistan have assisted in stabilizing the economy, restoring foreign exchange reserves, and boosting investor confidence despite the external environment.”
IMF evaluation of Pakistan’s progress on its program
How Pakistan Reached The $4.8 Billion Amount That Has Already Been Received
The amount of $4.8 billion that has been reached so far in terms of the amount received by Pakistan from the IMF funds can be attributed to various successful reviews of the programme since its approval. This year, the IMF Executive Board reviewed the programme, resulting in Pakistan being able to access approximately $1.32 billion, totaling $4.8 billion.
The Reforms Pakistan Needs to Maintain
The disbursement program for Pakistan’s $3.6 billion IMF loan program can really be seen as a performance-based agreement. The IMF makes payments to Pakistan when it meets its requirements. The entire 14-month period is divided into several reviews during which Pakistan will be evaluated based on certain quantitative criteria regarding fiscal, monetary, reserve build up, and other reforms.
Pakistan has successfully passed all tests till now. The challenge for the coming 14 months would be whether this momentum of reforms which has allowed $4.8 billion in disbursements can continue and lead to unlocking of another $3.6 billion, and the stabilization it provides results in growth acceleration needed by Pakistan’s economy and people.
