We have secured the coveted agreement
EDITORIAL: The staff-level agreement on the fourth review of the $7 billion Extended Fund Facility (EFF) and the third review of the $1.4 billion Resilience and Sustainability Facility (RSF) was reached and uploaded on the International Monetary Fund website on 7 October at the conclusion of the two-week mission. The data pertained to last fiscal year ending on 30 June, with the exception of…
The Pakistan government and the International Monetary Fund (IMF) have reached an agreement on the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF). This deal, concerning a $7 billion EFF and a $1.4 billion RSF, was finalized during a two-week mission that concluded on 7 October. The agreement, uploaded to the IMF's website, focused on the fiscal year ending on June 30, excluding inflation figures.
Pakistan's economy experienced a 4% real GDP growth in the first three quarters of fiscal year 2026 (FY26). Despite higher energy prices and supply disruptions, FY26 growth is projected at 3.6%. Inflation peaked in May but has since moderated to about 10.3% in September, while core inflation has remained relatively stable. The current account is broadly balanced, driven by strong remittances, and gross reserves have increased to approximately US$21.5 billion by the end of September.
The Pakistan Bureau of Statistics notes that headline inflation has not peaked since May, and that 44.7% of Pakistanis live below the poverty line, as defined by the World Bank. The 10.3% year-on-year inflation rate in September is down by 0.8% from 11.1% in August, while core inflation has declined from 9% in May to 8.6% in September.
Higher consumption levels, particularly due to rising food and energy costs, are cited as factors contributing to the growth rate increase. Remittances have also increased unexpectedly, possibly due to Pakistani overseas workers choosing not to return amidst the Middle East conflict.
Foreign exchange reserves are at a historic high of $21 billion, covering roughly 3.2 months of imports, which is the minimum required by multilaterals. The IMF acknowledged that sovereign rating upgrades and renewed international market access indicate stronger policy credibility. However, risks persist, including geopolitical tensions, volatile energy prices, tighter global financial conditions, and trade disruptions.
The IMF also announced a two-phase issuance of $3 billion in Eurobonds last month on the London Stock Exchange, with a maturity of 5.5 years at a 7.5% interest rate and 10 years at a 7.9%. These rates are nearly double those available from other sources, but the issuance is still significant as this funding option was previously deemed too expensive by the caretaker finance minister in 2023.
The IMF press release included a graph comparing Pakistan's structural indicators to those of emerging market and developing economies, highlighting the potential for significant improvement.
Written by urgent.news from Business Recorder's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
