Pakistan reaches IMF staff deal for $1.2B as energy shocks weigh on economy

Pakistan has reached a staff-level agreement with the International Monetary Fund (IMF) that could unlock about $1.2 billion in financing as the country faces higher energy costs and supply disruptions linked to the Middle East conflict.

The agreement remains subject to approval by the IMF’s Executive Board.

Once approved, Pakistan would receive about $1 billion under the Extended Fund Facility and another $210 million under the Resilience and Sustainability Facility, which supports climate-related reforms.

The disbursements would bring total financing released under the two programs to about $5.7 billion.

The IMF said Pakistan had preserved economic stability despite the conflict’s impact, estimating economic growth at 3.6% in fiscal year 2026.

Higher energy prices and supply disruptions weighed on economic momentum, while foreign exchange reserves rose to about $21.5 billion by the end of September.

Headline inflation eased to about 10.3% in September after peaking in May, while core inflation remained contained, according to the fund.

The IMF said the State Bank of Pakistan should maintain an appropriately tight monetary policy stance to ensure inflation returns durably to its target range.

The additional financing would support Pakistan’s efforts to strengthen its foreign exchange buffers and sustain its economic recovery.

Pakistan remains exposed to disruptions in Gulf energy supplies, with much of its energy imports passing through the Strait of Hormuz.