IMF approves $1.3 billion loan for Pakistan, frees first tranche of bailout package

Pakistan’s Finance Minister Muhammad Aurangzeb (second left) speaks with International Monetary Fund (IMF) Mission Chief for Pakistan Nathan Porter (2R) during a meeting in Islamabad. File photo
| Photo Credit: AFP

The International Monetary Fund approved a loan of USD 1.3 billion for Pakistan to address climate change while also reaching a staff-level agreement on the first review of the already agreed USD 7 billion loan.

The new agreement spans over 28 months under the Climate Resilience and Sustainability Facility which aims to help nations address climate challenges while committing to reforms.

Additionally, freeing USD 1 billion for the country under the USD 7 billion bailout programme would bring the total disbursements to USD 2 billion.

“The IMF team has reached a staff-level agreement (SLA) with the Pakistani authorities on the first review of the 37-month extended arrangement under the Extended Fund Facility (EFF), and on a new 28-month arrangement under the IMF’s (Resilience and Sustainability Trust) with total access over the 28 months of around USD 1.3 billion,” Nathan Porter, mission chief to Pakistan, said on Tuesday (March 25, 2025).

“Upon approval (by the IMF board), Pakistan will have access to about USD 1 billion under the EFF, bringing total disbursements under the programme to about USD 2 billion,” he added.

IMF pats Pakistan for bringing ‘stability’

According to Radio Pakistan, the two agreements giving access to about 2 billion dollars is a “testament to Pakistan’s significant strides in economic reforms, focusing on tax equity, monetary stability, energy sector transformation, and climate resilience.”

The IMF in its statement also appreciated Pakistan for its efforts to bring stability.

“Over the past 18 months, Pakistan has made significant progress in restoring macroeconomic stability and rebuilding confidence despite a challenging global environment,” Mr. Porter said in a statement by the Fund.

He stated that while economic growth remains moderate, inflation has declined to its lowest level since 2015, financial conditions have improved, sovereign spreads have narrowed significantly and external balances are stronger.

The approval of a fresh loan and endorsement to release a second tranche under EFF would help Pakistan to address the issue of climate change and the balance of payments.