Connect with us

Business

IMF approves another $1.2bn tranche for Pakistan

Published

3 days ago

on



• Allows Islamabad to draw $1bn under EFF and $200m under RSF after successful review
• Says country maintained stability despite severe floods and a difficult global environment
• Calls for continuing tight monetary policy, strengthening tax base, improving governance, focusing on SOE reforms and privatisation

WASHINGTON: The Internat­ional Monetary Fund (IMF) has approved a fresh disbursement of around $1.2 billion to Pakistan under its dual-track bailout — the 37-month Extended Fund Facility (EFF) and the climate-focused Res­i­l­ience and Sustainability Facility (RSF). The decision came on Monday, after the IMF Exec­utive Board convened in Washington.

The board’s statement highlighted that “Pakistan’s strong programme implementation, despite the recent devastating floods, has maintained stability and improved financing and external conditions”.

It stressed that the country’s policy priorities remain centred on maintaining macroeconomic stability and advancing reforms to strengthen public finances, enhance competition, raise productivity and competitiveness, bolster the social safety net and human capital, reform state-owned enterprises (SOEs), and improve public service provision and energy sector viability.

The approval reflects the Fund’s recognition of Pakistan’s significant progress in stabilising the economy and rebuilding confidence amid a challenging global environment.

The board noted that Pakistan’s fiscal performance has been strong, with a primary surplus of 1.3 per cent of GDP achieved in FY25, in line with programme targets. Gross reserves stood at $14.5bn at end-FY25, up from $9.4bn a year earlier, and are projected to continue rebuilding in FY26 and over the medium term. The board also noted that “inflation has increased, reflecting the impact of the floods on food prices, but this is expected to be temporary”.

IMF Deputy Managing Director and Acting Chair Nigel Clarke said in a statement that “in the face of an uncertain global environment, Pakistan needs to maintain prudent policies to further entrench macroeconomic stability, while accelerating reforms necessary to achieve stronger, private-sector-led, and sustainable medium-term growth”.

He highlighted the importance of “advancing reforms to raise revenues via tax policy simplification and base broadening”, describing it as key to achieving fiscal sustainability and building the fiscal space necessary to boost climate resilience, social protection, human capital development, and public investment.

Mr Clarke also stressed that “reforms in the energy sector are critical to safeguarding its viability and improving Pakistan’s competitiveness”. He noted that timely power tariff adjustments had “helped reduce the stock and flow of circular debt”, while emphasising that “subsequent efforts need to focus on sustainably reducing electricity production and distribution costs and addressing inefficiencies in the power and gas sector”.

The board stated that RSF tranche is designed to support Pakistan’s climate adaptation and disaster resilience agenda. Clarke explained that it backs initiatives to “strengthen natural disaster response and financing coordination, improve the use of scarce water resources, raise climate considerations in project selection and budgeting, and improve the information on climate-related risks in financing decisions”.

The board noted that “the recent floods highlight the urgency of moving swiftly on climate-related reforms to build resilience to the frequent natural disasters that Pakistan faces. The authorities are making progress on such reforms, supported by the RSF”.

The IMF welcomed Pakistan’s publication of the Governance and Corruption Diagnostic Assessment, describing it as “a welcome step in accelerating governance reforms”.

Mr Clarke added that “additional efforts should focus on SOE governance reforms and privatisation, enhancing the business environment, and improving economic data and statistics”.

The board highlighted that Pakistan has made notable progress on structural reforms. “Efforts to advance structural ref­orms should continue to unlock growth potential and attract high-impact private investment,” Mr Clarke said, stressing that sustained reform in state-owned enterprises, energy policy, and public service delivery is essential for lasting economic stability.

With this tranche, total disbursements to Pakistan under the EFF and RSF now stand at approximately $3.3 billion, supporting both macroeconomic stabilisation and long-term structural reforms for climate resilience. Observers said that the funds will help provide breathing space for debt servicing, bolster import cover, and support critical investments, including infrastructure upgrades, water management, and other climate-adaptation measures under the RSF roadmap.

Officials in Islamabad welcomed the approval as a vote of confidence in Pakistan’s reform efforts and macroeconomic management, while emphasising that the real test will be in turning these commitments into tangible economic recovery.

Analysts noted that continued discipline in fiscal and energy policy, governance reforms, and climate adaptation will be crucial to ensure that the relief is sustainable and that Pakistan can build resilience against future shocks.

The IMF’s endorsement comes amid a challenging global backdrop, including commodity-price volatility, tight global financial conditions, and recurring climate-related disasters. Against this bac­kdrop, the approval is being seen not just as a financial lifeline, but as a signal that disciplined reforms and effective use of funds can strengthen Pakistan’s economic foundations and resilience to future shocks.

Published in Dawn, December 9th, 2025



Source link

Related Topics:
Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

SBP receives $1.2bn tranche from IMF

Published

7 hours ago

on

December 11, 2025

By



The State Bank of Pakistan (SBP) said on Thursday that it had received $1.2 billion from the International Monetary Fund (IMF) after the global money lending agency approved the second reivew of Pakistan’s loan programmes.

“The amount would be reflected in SBP’s foreign exchange reserves for the week ending on Dec 12,” central bank says.

More to follow





Source link

Continue Reading

Business

ADB lifts Pakistan’s growth outlook

Published

10 hours ago

on

December 11, 2025

By



ISLAMABAD: The Asian Development Bank (ADB) on Wednesday upgraded Pakistan’s economic growth forecast for the current fiscal year due to a less severe-than-anticipated impact of flooding, increased public investment, and anticipated stabilising inflation.

In its Asian Development Outlook December 2025, the Manila-based lending agency also revised the growth outlook for the South Asian Region upward for the current year.

“In the case of South Asia, growth forecasts for 2026 have been revised upward for Sri Lanka and Pakistan, respectively, due to increased public investment and a less-severe-than-anticipated impact of flooding,” it said in its latest report without actually saying where it expected Pakistan’s growth to settle for the year. In July, the ADB had set a 2026 growth forecast for Pakistan at 3pc and had kept it unchanged in its September update in the middle of flooding across Punjab’s agricultural heartland.

“The growth outlooks for Pakistan and Sri Lanka have improved for both 2025 and 2026”, it said, adding that the Government of Pakistan updated its estimate of GDP growth for FY25 to 3pc from a previously reported 2.7pc. “Despite disruptions that resulted from floods in June 2025, the economy grew 5.7pc in Q4FY25, and the country’s large-scale manufacturing expanded robustly in recent months in FY26”, it said.

Sees robust growth for South Asia for 2025 and 2026 despite challenges

Pakistan’s inflation for the first four months (July-October) of FY26 was 4.7pc, down from 8.7pc in the same period a year ago, the bank said, adding “after a sharp increase in the months immediately after the floods, prices of key food items have begun to stabilise”.

It forecast the growth in South Asia to remain robust, with the 2025 forecast revised upward to 6.5pc from 5.9pc, and the 2026 forecast maintained at 6pc. This is driven by upgrades to India’s outlook, based on robust domestic consumption growth. Sri Lanka’s forecasts for 2025 and 2026 are revised upward due to robust credit expansion, buoyant consumption, and improved investor confidence following rating upgrades.

In contrast, Bangladesh’s fiscal year ending June 30, 2026 projection was lowered due to weaker exports amid subdued global demand and supply disruptions, while the forecast for FY2025 remains unchanged. Pakistan’s FY2025 growth outlook was upgraded following a stronger-than-expected Q4, it said.

Growth forecasts for the remaining South Asian economies are retained, although Nepal faces lingering uncertainty in the aftermath of September’s civil unrest and the ongoing political transition.

India’s growth forecast for FY2025 (fiscal year ending March 2026) was revised to 7.2pc from 6.5pc in the September ADO, reflecting stronger third-quarter expansion as tax cuts supported consumption. Indian GDP grew faster than expected at 8.2pc in the second quarter of FY25. The 2026 forecast was kept unchanged at 6.5pc. The bank also raised its growth forecasts for economies in developing Asia and the Pacific for this year and next, amid stronger-than-expected exports and reduced trade uncertainty following the conclusion of several trade agreements with the United States.

Risks to the regional outlook include renewed trade tensions and financial market volatility, as well as geopolitical pressures and a worse-than-expected deterioration in the People’s Republic of China’s (PRC) property market. China’s growth forecast for this year has been raised slightly to 4.8pc from 4.7pc, amid resilient exports and continued fiscal stimulus. The outlook for 2026 was kept unchanged at 4.3pc.Southeast Asia’s growth projection for this year was also upgraded by 0.2 percentage points to 4.5pc, reflecting a strong third quarter in Indonesia, Malaysia, Singapore, and Vietnam.

Published in Dawn, December 11th, 2025



Source link

Continue Reading

Business

$119m withdrawn from T-bills in Nov

Published

10 hours ago

on

December 11, 2025

By



KARACHI: Instead of improving, the foreign investment climate has become more difficult for Pakistan, as seen in treasury bills where outflows surged by 54 per cent in November — a trend similar to that of foreign direct investment (FDI).

November proved to be the worst month for T-bill inflows and outflows so far in FY26. According to the State Bank’s latest data, foreign inflows in T-bills amounted to $77 million against outflows of $119m during the month.

Most of the outflows went back to Arab countries despite their assurances of investing in Pakistan. The trend is disappointing for a government striving to attract foreign investors across sectors and offering incentives through the Special Investment Facilitation Council (SIFC). Despite its creation to draw investment, the SIFC has yet to achieve meaningful results, and the Board of Investment has also been unable to secure major successes.

During November, the highest inflows came from the UK at $37m, followed by $20m from the UAE and $19m from Bahrain. However, the largest outflows — $51m and $41m — also went to the UAE and Bahrain, respectively, while the UK saw an outflow of $27m.

Govt raises Rs1.2tr amid over-liquid market

The inflow-outflow pattern shows that only a few countries are investing small amounts in high-yielding (around 11pc) T-bills. Despite attractive returns, the broader investment environment appears unappealing. Ongoing terrorism in two provinces and tensions with India and Afghanistan have further undermined investor confidence.

This is reflected in the shrinking FDI, which fell by 26pc in the first four months of the current fiscal year — already the lowest level in the region.

In the first five months of FY26, T-bill inflows were still higher than outflows at $410m compared to $333m during the same period.

Analysts and currency watchers remain pessimistic about any substantial improvement in foreign investment in the second half of the fiscal year.

The government, however, hopes to generate dollars through the sale of PIA and other assets, although major bidders are expected to be Pakistani investors with strong industrial presence. Despite the government signing MoUs with countries, including Saudi Arabia and the UAE, observers do not see significant foreign investment materialising anytime soon.

Treasury bills, bonds

The government raised a total of Rs1.2 trillion through the auction of Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs) on Wednesday.

According to the State Bank, the government raised Rs884.7bn through direct auction of T-bills and Rs97bn through non-competitive bids, bringing the total to Rs981.7bn. An additional Rs190.7bn was raised via 10-year PIBs, taking the day’s total mobilisation to Rs1.2tr.

The market appears over-liquid, with T-bill bids reaching Rs1,925bn and PIB bids Rs523bn — a combined Rs2.448tr. This also indicates low private-sector borrowing and sluggish economic activity, mirroring the past three years.

Published in Dawn, December 11th, 2025



Source link

Continue Reading

Trending