The International Monetary Fund’s Executive Board completed the third review of Pakistan’s 37-month Extended Fund Facility (EFF) and the second review of its 28-month Resilience and Sustainability Facility (RSF) at a meeting on 8 May 2026 (IMF). The decision unlocked an immediate disbursement of roughly US$1.1 billion (SDR 760 million) under the EFF and around US$220 million (SDR 154 million) under the RSF — a combined US$1.32 billion (Arab News). That brings total disbursements under the two arrangements to about US$4.8 billion (The Nation).
The Fund characterised Islamabad’s delivery as on track. “Pakistan’s strong program implementation under the EFF arrangement has continued, which has supported macroeconomic stability,” IMF Deputy Managing Director Nigel Clarke said in the accompanying statement (Arab News). The board noted that GDP growth accelerated, inflation remained contained and the current account was broadly balanced in the first nine months of FY26 (24NewsHD).
On the fiscal side, the centrepiece anchor held. A primary surplus of 1.6 percent of GDP is expected to be achieved in FY26, in line with programme targets (The Nation). External buffers also strengthened: gross reserves stood at US$16 billion at end-December 2025, up from US$14.5 billion at end-June 2025, and are projected to keep rebuilding over the medium term (Arab News).
The reform conditionality attached to continued support remains demanding. Clarke pressed authorities to “maintain strong macroeconomic policies while accelerating reform efforts, which are critical to managing further shocks and fostering higher sustainable medium-term growth,” urging “gradual fiscal consolidation” alongside “continued efforts to boost revenue mobilization—through broadening the tax net” (Arab News; The Nation). The Fund also called for tight monetary policy to anchor inflation expectations, greater exchange-rate flexibility as the primary shock absorber, keeping fuel, electricity and gas prices aligned with costs, and reducing energy-sector inefficiencies (Arab News).
The RSF leg, which targets climate and disaster resilience, ties disbursements to structural measures spanning natural-disaster resilience and public investment, efficient water-resource management through better pricing, federal-provincial coordination on disaster response, a climate-risk disclosure architecture for banks and corporates, and meeting mitigation commitments (The Nation).
The outlook into FY2026-27 is more cautious than earlier in the year. The IMF trimmed Pakistan’s FY27 growth forecast to 3.5 percent, down from 4.1 percent projected in January 2026, attributing the cut to the “Iran war and surging tensions in the Middle East region” disrupting growth and disinflation worldwide (Arab News). Average inflation is seen at 7.2 percent in FY26 rising to 8.4 percent in FY27, with the current-account deficit widening to 0.9 percent of GDP from 0.4 percent (Arab News).
That baseline already faces domestic scrutiny ahead of the FY27 budget. Analysis cited by Business Recorder placed FY27 growth at 2.5 percent against the Fund’s 3.5 percent and inflation at 12 percent against 8.4 percent, while parliamentary finance committees flagged the revenue target underpinning the budget as “ambitious” (Business Recorder). With the EFF approved in September 2024 and the RSF in May 2025, Islamabad’s task now is to convert stabilisation into the sustained primary surpluses and broadened tax base the Fund has made the price of the next tranche.
