The International Monetary Fund (IMF) has approved the immediate release of $1 billion to Pakistan under the ongoing Extended Fund Facility (EFF), while also endorsing an additional $1.3 billion under the Resilience and Sustainability Facility (RSF), despite reported efforts by India to block the move.
Tensions between India and Pakistan had escalated following the Pahalgam attack, prompting New Delhi to call on the IMF to reassess its financial support to Islamabad. However, those attempts ultimately proved unsuccessful. Indian Foreign Secretary Vikram Misri had earlier stated that India’s executive director at the IMF would raise the country’s position at the board meeting.
In a statement issued after the IMF’s decision, Prime Minister Shehbaz Sharif expressed satisfaction over the approval and criticized India’s efforts. “India is attempting to derail our development through unilateral aggression and baseless conspiracies. The international community has responsibly rejected this false narrative,” he said.
Pakistan had earlier reached a staff-level agreement (SLA) with the IMF in March, part of a broader $7 billion bailout package initiated last year. The new climate resilience component under the RSF is intended to support Pakistan’s adaptation and mitigation efforts in response to climate change.
The funding is vital for Pakistan’s $350 billion economy, which has shown signs of stabilization under the IMF programme, helping the country avoid a default.
Finance Minister Muhammad Aurangzeb, who recently met IMF Managing Director Kristalina Georgieva during the 2025 World Bank-IMF Spring Meetings in Washington, reiterated the government’s commitment to structural reforms.
According to the IMF’s latest World Economic Outlook, Pakistan’s GDP growth is projected at 2.6% for the current fiscal year, slightly revised down from 3%, while growth for 2025–26 is expected to rise to 3.6%. Inflation, which stood at 23.4% in 2024, is forecast to drop to 5.1% this fiscal year but could rise to 7.7% next year.
The IMF also revised Pakistan’s current account deficit projection, estimating it at just 0.1% of GDP, or $400 million—down sharply from the earlier estimate of 1%, or $3.7 billion. For 2026, the deficit is projected to increase modestly to 0.4% of GDP.
The unemployment rate is expected to improve slightly, falling from 8.3% in 2024 to 8% in 2025, with further improvement to 7.5% forecast for 2026.
Separately, Finance Minister Aurangzeb confirmed that Pakistan has requested China to increase its existing 30 billion yuan currency swap line by another 10 billion yuan (approximately $1.4 billion), in a bid to further strengthen foreign exchange reserves.
