ISLAMABAD: The International Monetary Fund (International Monetary Fund) said on Friday that Pakistan’s consistent and disciplined policy implementation has helped maintain economic stability and improve financial conditions, although geopolitical tensions in the Middle East continue to pose risks to the outlook.
The IMF urged Pakistan to maintain fiscal discipline and accelerate structural reforms to achieve long-term sustainable growth and economic resilience.
The IMF Executive Board released a report confirming the completion of the third review under the Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF).
A day earlier, the State Bank of Pakistan confirmed receipt of $1.32 billion, including $1.1 billion under the EFF and around $220 million under the RSF.
The Fund said Pakistan had made significant progress under its reform programme, which helped restore macroeconomic stability and investor confidence despite global uncertainty, particularly amid conflict in the Middle East.
It said fiscal performance remained strong and projected that Pakistan would achieve a primary surplus of 1.6 percent of GDP in fiscal year 2026.
However, the IMF warned that rising global commodity prices and energy costs were adding inflationary pressure to the economy.
The report said total disbursements under both programmes had reached about $4.8 billion, adding that the programme continued to play a central role in stabilising the economy, rebuilding confidence and strengthening external buffers.
It noted that Pakistan’s economy improved in the first half of the fiscal year, inflation remained contained, and the current account stayed broadly balanced.
Foreign exchange reserves rose to nearly $16 billion by the end of December, the IMF said.
However, the Fund cautioned that the Middle East conflict had created new uncertainties in the economic outlook.
It said Pakistan must sustain strong macroeconomic policies and accelerate reforms to withstand potential external shocks.
The IMF called for continued fiscal discipline, broader tax mobilisation and improved public financial management.
It also supported the State Bank’s tight monetary policy stance, saying it helped contain inflation.
The Fund stressed that exchange rate flexibility was essential for external stability, alongside efforts to strengthen the foreign exchange market and rebuild reserves.
The IMF said structural reforms remained critical for sustainable growth, including reforms in state-owned enterprises, governance improvements and steps to enhance the business environment.
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IMF Deputy Managing Director Nigel Clarke said Pakistan’s programme performance remained strong and had supported stability despite challenging global conditions.
The report warned that the Middle East conflict could increase inflationary pressure and external account stress, although the overall impact was expected to remain limited, with risks still elevated.
