US$1.2bil IMF bailout for Pakistan clears key hurdle

In a significant development, the International Monetary Fund (IMF) and Pakistani authorities have reached a staff-level agreement, clearing a crucial hurdle towards securing a multi-billion dollar bailout deal, according to the organization. The agreement, which would provide Pakistan with approximately US$1.2 billion, now awaits approval from the IMF Executive Board.

IMF negotiator Iva Petrova revealed that Pakistani officials have effectively managed the repercussions of the Middle East conflict and have implemented robust policies that have maintained macroeconomic stability. Pakistan, a vital intermediary between the United States and Iran, experienced surging prices for food, fuel, and rent, which threatened the country's already fragile economy during months of global energy disruptions and fighting.

Despite these challenges, Pakistan managed to achieve real GDP growth of 4% in the first three quarters of the 2026 fiscal year, as reported by Petrova. However, the momentum was somewhat dampened by higher energy prices and supply disruptions. Overall, the fiscal year's growth is projected to reach 3.6%. Headline inflation, which peaked in May, has since moderated to around 10.3% in September, while core inflation remains under control, according to Petrova.