US$1.2bil IMF bailout for Pakistan clears key hurdle

The International Monetary Fund (IMF) has reached a staff-level agreement with Pakistani authorities, paving the way for a US$1.2 billion bailout package, according to the organization's statement on Wednesday. While demonstrators took to the streets in major cities over the past year to protest rising food, fuel, and rent prices, recent conditions have shown improvement. This agreement, which would grant Pakistan access to approximately US$1.2 billion, still needs approval from the IMF Executive Board.

IMF negotiator Iva Petrova revealed that Pakistani officials have successfully navigated the challenges posed by the Middle East conflict, thanks to strong policies that have helped maintain macroeconomic stability. Pakistan, a crucial mediator between the US and Iran, experienced soaring prices during months of fighting and disruptions to global energy shipments, threatening its already fragile economy.

Over the past year, protesters in major cities called for relief from spiking food, fuel, and rent prices, as well as assistance in finding stable employment.

The South Asian nation has seen a real GDP growth of 4% in the first three quarters of the fiscal year 2026, according to Petrova, although higher energy prices and supply disruptions slightly dampened this momentum. Overall, the fiscal year's growth is estimated at 3.6%. Headline inflation peaked in May but has since moderated to around 10.3% in September, while core inflation remains contained, as per Petrova's report.