INVC NEWS Washington, DC, – The International Monetary Fund (IMF) has disbursed the second tranche of $1.023 billion to Pakistan, signaling continued confidence in the country’s economic reform trajectory. The release comes under the ongoing Extended Fund Facility (EFF) and follows the IMF’s approval last week after a successful first review of Pakistan’s fiscal performance and structural reforms.
Pakistan’s Economic Reforms Receive IMF Endorsement
According to the IMF, Pakistan’s progress under the EFF has been notable, with key macroeconomic indicators showing resilience despite global headwinds. The Fund acknowledged that Pakistan’s fiscal discipline and policy adjustments are yielding results. A primary surplus of 2% of GDP was recorded in the first half of FY 2025, putting the country on a solid path to achieving its annual target of 2.1%.
The IMF emphasized that such improvements are instrumental in stabilizing the economy, rebuilding investor confidence, and maintaining foreign exchange reserves, especially critical in the current uncertain global financial landscape.
Foreign Exchange Reserves Show Upward Trend
Pakistan’s gross official reserves, as of the end of April 2025, stood at $10.3 billion, up from $9.4 billion in August 2024. The IMF projects that by the end of June 2025, these reserves could reach $13.9 billion, offering much-needed breathing space for the country’s external account.
The Fund confirmed that the second installment of the EFF disbursement would be reflected in Pakistan’s official reserves by May 16, providing further support to the central bank’s efforts to maintain currency stability and external financing needs.
Virtual Discussions on Budget Framework Underway
Parallel to the release of funds, the IMF has initiated virtual consultations with Pakistani authorities focused on the budgetary framework for FY 2025–26. These virtual discussions will continue until May 16, after which an in-person mission is scheduled.
Sources close to the matter revealed that the IMF has appointed a new mission chief for Pakistan—Iva Petrova, a Bulgarian-born economist with extensive experience in fiscal and monetary stabilization in developing economies. Petrova will work alongside outgoing mission chief Nathan Porter during the ongoing consultations.
IMF Mission Expected in Islamabad by May 18
Provided the security situation remains stable, the IMF’s core team—led by Petrova—is expected to arrive in Islamabad over the weekend, with meetings scheduled to continue through May 23. The agenda includes a detailed review of fiscal projections, subsidy rationalization, revenue enhancement strategies, and structural reforms critical to sustaining the EFF framework.
Extended Fund Facility: A Lifeline Amid Economic Pressures
The EFF, a 39-month loan program originally designed to assist countries with protracted balance-of-payments issues, has been a central pillar of Pakistan’s economic recovery plan. The IMF’s latest disbursement marks an important milestone in Islamabad’s ongoing efforts to regain economic footing, restore market credibility, and prevent a repeat of the 2023 liquidity crisis.
Since the program’s inception, the IMF has remained focused on ensuring that Pakistan maintains fiscal discipline, improves tax collection, reforms loss-making state-owned enterprises, and strengthens the financial sector to foster sustainable growth.
What Comes Next: Budget, Reforms, and Global Oversight
The upcoming days will be critical for Pakistan as it navigates budget formulation, engagement with global lenders, and compliance with IMF benchmarks. Analysts believe that the budget will reflect a tight fiscal stance, focusing on broadening the tax base, controlling expenditures, and reducing fiscal risks tied to energy subsidies and public sector liabilities.
The presence of a new IMF mission chief also signals renewed scrutiny and potential recalibration of reform priorities, particularly in the context of geopolitical pressures, rising inflation, and regional instability.
Market Reaction and Economic Outlook
Markets in Pakistan reacted cautiously optimistic to the IMF’s announcement. The Pakistani rupee gained modestly against the US dollar, while the stock market saw a slight uptick in banking and energy sector shares, driven by improved investor sentiment over foreign reserve stability.
Economic observers are closely watching how Pakistan will capitalize on this momentum, especially with foreign reserves on the rise and international financial institutions keeping a close eye on Islamabad’s reform roadmap.
In summary, the IMF’s disbursement of $1.023 billion reinforces international confidence in Pakistan’s economic reforms, while the initiation of virtual budget talks signals the start of a crucial fiscal phase. With an incoming mission in Islamabad and a new chief at the helm, Pakistan’s financial path over the coming months will be closely watched on the global stage.
