IMF disburses $1.023 billion tranche to Pakistan

The International Monetary Fund has disbursed a second tranche of $1.023 billion under the Extended Fund Facility programme for Pakistan, the central bank said on Wednesday (May 14, 2025).

The disbursement of the second tranche comes on a day when the IMF is holding virtual discussions on Pakistan’s upcoming Budget as the visit of its mission to Islamabad was delayed due to security concerns in the region.

With the transfer, the total disbursements stand at approximately $2.1 billion under the IMF’s Extended Fund Facility (EFF) of $7 billion, which was signed between Pakistan and the global lender last year.

The federal government is planning to unveil the Budget for fiscal 2025-26 on June 2. The IMF talks will continue until May 16.

The central bank said the second tranche amount would be reflected in its foreign exchange reserves for the week ending May 16.

The amount was approved last week by the IMF board under the ongoing EFF and allowed an additional arrangement for the $1.4 billion Resilience and Sustainability Facility (RSF).

The RSF is intended to support countries facing climate vulnerabilities and natural disasters by strengthening long-term macroeconomic stability and resilience.

Pakistan is heavily dependent on the IMF bailout package which helped to shore up its dwindling reserves. The country got backing of the fund at a critical time last year when it was on the verge of bankruptcy and was saved by the lender by providing $3 billion on a short-term basis.

According to the details on the IMF website, Pakistan has received at least 25 bailout loans since becoming a member of the Fund. The decision to release the funds came after the IMF expressed satisfaction on the first review of Pakistan’s economic reform programme supported by the EFF Arrangement, the bank said.

The IMF noted that Pakistan’s policy efforts under the EFF had already delivered “significant progress” in stabilising the economy and rebuilding confidence, amidst a challenging global environment.

“Fiscal performance has been strong, with a primary surplus of two per cent of gross domestic product achieved in the first half of FY25, keeping Pakistan on track to meet the end-FY25 target of 2.1 per cent of GDP,” it said.

Pakistan’s gross reserves stood at $10.3 billion at the end of April, up from $9.4 billion in August 2024, and are projected to reach $13.9 billion by the end of June and continue to be rebuilt over the medium term, it was pointed out.

Meanwhile, the IMF talks that started virtually Wednesday will continue until May 16.

The global lender has appointed a new mission chief to Pakistan and the mission is now expected to travel to Islamabad over the weekend, subject to the security situation, government sources told The Express Tribune on Tuesday.

The IMF mission delayed its scheduled arrival here on Tuesday due to uncertainty caused by the India-Pakistan conflict that had affected air travel across the region.

“Virtual discussions are expected to be held from today. For the second and final leg of the talks, the IMF team is expected to arrive in Islamabad on Saturday and stay until May 23,” the source said.

The IMF’s Resident Representative to Pakistan, Mahir Binici, did not respond to a request for comment on the change in the travel plan.

Finance Ministry spokesperson Qumar Abbasi also did not respond to questions on the change in the travel plans.

Meanwhile, the IMF appointed Iva Petrova, a Bulgarian origin staff member, as new Mission Chief to Pakistan. She would join the discussions along with the outgoing Mission Chief Nathan Porter, who served in the position for an extended term.

Mr. Binici also did not comment on whether both outgoing and new mission chiefs would join both rounds of talks.

Ms. Petrova, who holds a Ph.D. degree in Economics from the Michigan State University, has been serving as the IMF Mission Chief to Armenia. Previously, she had served with the missions to Israel, Iceland and Latvia.

In Pakistan, the fiscal policy is expected to remain tight in the next fiscal year too. The IMF has asked Pakistan to make a budget on the assumption of having 1.6% of the GDP primary budget surplus, which will require generating about Pakistani Rupee (PKR) 2 trillion over and above the non-interest expenses.

The tax target for the Federal Board of Revenue (FBR) is proposed to be 11% of the GDP or PKR 14.3 trillion. The IMF would examine whether the government plans to take credibly realistic measures to back the new tax target, said the sources.

The IMF has set multiple fiscal conditions, whose successful completion has so far helped smooth continuation of the programme despite initial setbacks.

Pakistan has met the IMF targets for a primary budget surplus by the federal government, as well as net revenue collection and cash surplus targets by the four provinces.

Against a primary surplus target of PKR 2.7 trillion, the federal government reported a surplus of PKR 3.5 trillion, or 2.8% of GDP.

The size of the federal Budget still remains tentative due to redoing of defence needs and the government plans to announce less than PKR 18 trillion Budget. The overall Budget deficit target after incorporating large provincial cash surpluses is projected at 5.1% of the GDP or PKR 18 trillion Budget 6.7 trillion, the sources said.