Pakistan receives further $1.2bn IMF loan

Pakistan has secured an additional $1.2 billion from the International Monetary Fund (IMF), a move the government says reflects the country’s progress after two years of economic turmoil. The IMF approved the disbursement on Monday in Washington, raising the total amount released under its bailout and climate sustainability programs to $3.3 billion.

Nigel Clarke, the IMF’s deputy managing director, said Pakistan’s reform measures had helped maintain macroeconomic stability despite major shocks, including last year’s devastating floods. The fund expects Pakistan’s economic growth to reach 3.2 percent in the fiscal year ending June 2026, up from an estimated 3.0 percent the previous year. Inflation is projected to fall sharply this fiscal year, averaging 6.3 percent compared with 23.4 percent in the year ending June 2024.

Clarke emphasized the need for further structural reforms, including privatization of state-owned enterprises and continued investment in climate resilience to reduce vulnerability to severe weather. He also highlighted the importance of stronger anti-corruption efforts, noting a recently released government-commissioned report on fraud as a positive step.

Prime Minister Shehbaz Sharif welcomed the new funding, calling it evidence that Pakistan is taking the necessary measures to restore stability and growth. He noted the challenges faced in steering the country away from a near-default situation in 2023, when Pakistan secured an IMF bailout under the Extended Fund Facility, which is expected to reach $7 billion in the coming years.

As part of the agreement, Pakistan committed to addressing corruption, including money laundering and the financing of terrorism. An IMF review published in November found deep-rooted corruption risks in Pakistan’s state-dominated economy, warning of harmful effects on growth, investment, and public confidence. It urged the government to strengthen the rule of law and improve the effectiveness of anti-corruption institutions.

Pakistan remains one of the IMF’s largest borrowers after Argentina and Ukraine. In addition to the IMF support, the country received a 10-year, $20 billion financing package from the World Bank in January.