International
oi-Gaurav Sharma
Pakistan is waiting to get approval for another $1.2 billion in financial aid from the International Monetary Fund (IMF). This shows that despite stabilising in recent years, Pakistan remains significantly reliant on external lenders. Islamabad will chair the Boards of Governors of the IMF and World Bank Group in 2027 when it assumes the post.
Pakistan’s request for new funding comes after a staff-level agreement on access to a fresh tranche of about $1 billion under its existing $7 billion Extended Fund Facility (EFF) and an additional $210 million under the $1.4 billion Resilience and Sustainability Facility (RSF). The approval of these two programmes is needed from the IMF Executive Board.
Pakistan seeks IMF approval for $1.2 billion aid following staff-level agreements on $1 billion (EFF) and $210 million (RSF) programs, potentially raising total disbursements to $5.7 billion. The nation is also set to chair the IMF and World Bank Boards of Governors in 2027.
If approved, the two new programmes will bring total disbursements to Pakistan under these two facilities to around $5.7 billion.
Pakistan has had at least 25 IMF loan programmes since joining the Fund in 1950. Balance of payments challenges, inflation, debt service and external payment difficulties have repeatedly prompted Pakistan to seek IMF support.
Economic recovery challenged
Pakistan’s latest IMF programme review pointed to improvement in the country’s macroeconomic fundamentals. Real GDP grew 4 per cent in the first three quarters of fiscal year (FY) 2026, although rising energy prices and supply constraints pushed growth down afterwards. The overall FY2026 GDP growth is estimated at 3.6 per cent.
Inflation decreased to around 10.3 per cent in September following a peak in May. Current account balance remained broadly in equilibrium during FY26 thanks to remittances, while reserves rose to around $21 billion by the end of September.
Nevertheless, geopolitical tensions, volatile energy prices and tightening global financial conditions threaten the recovery. The World Bank has also raised concerns that Pakistan’s growth model of high public consumption, low productivity and large borrowing is unsustainable.
Pakistan to chair IMF and World Bank in 2027
In spite of the need for IMF aid, Pakistan will occupy the chair of the Boards of Governors of the IMF and World Bank Group next year. This will be the first time since 1953 that Pakistan will hold the position, which confers significant diplomatic heft but does not have control over lending decisions.
