Pakistan receives $1bn tranche from IMF

KARACHI: Pakistan received the second tranche of $1.023 billion from the International Monetary Fund (IMF) as part of a $7 billion loan programme, the central bank said on Wednesday.

“The SBP has received SDR 760 million (US$1,023 million) in value on 13 May 2025 from the IMF. The amount will be reflected in SBP’s foreign exchange reserves for the week ending on 16 May 2025,” the State Bank of Pakistan (SBP) said in a statement.

On Friday, the IMF completed the first review of a 37-month Extended Fund Facility (EFF) that the global lender agreed with Islamabad last year. This review resulted in the approval of a $1 billion disbursement for Pakistan. Additionally, the IMF approved a new loan of $1.4 billion under its climate resilience fund. These funds were released despite protests from India amid military escalation between the two nuclear-armed neighbours. However, both countries agreed to a ceasefire on Saturday, following diplomatic efforts and pressure from the United States.

The latest IMF disbursement provides much-needed relief to Pakistan’s fragile finances, helping to boost the country’s foreign exchange reserves and stabilise the economy. The SBP forecasts that the current account would remain in surplus throughout fiscal year 2025 and anticipates that its foreign exchange reserves would rise to $14 billion by June 2025. As of May 2, the reserves of the SBP were $10.332 billion.

“I think it’s a very positive development and will support FX reserves of the SBP, restoring more confidence in the Rupee and Pakistan’s external position,” said Mustafa Mustansir, the head of research at Taurus Securities.

“Pakistan’s policy efforts under the EFF have already delivered significant progress in stabilising the economy and rebuilding confidence, amidst a challenging global environment,” the IMF said in a statement following an approval of the EFF tranche.

In an interview with Reuters, Finance Minister Muhammad Aurangzeb said that the recent military standoff with its arch-rival India would not significantly affect the budgetary situation and could be managed within the existing fiscal space, negating the necessity for a fresh economic assessment.