The State Bank of Pakistan (SBP) on Wednesday confirmed that it has received the second tranche of $1.023 billion from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF) days after the global lender approved the first review of Pakistan’s ongoing loan programme.

According to the central bank, the inflow will be recorded in the country’s foreign exchange reserves for the week ending May 16.

The disbursement follows the IMF Executive Board’s meeting held in Washington, D.C., on May 9, during which it gave the green light to Pakistan’s progress under the $7 billion EFF arrangement.

The board’s approval comes after a staff-level agreement was reached between the Fund and Pakistani authorities on March 25, 2025.

The IMF also approved a new 28-month Resilience and Sustainability Facility (RSF) for Pakistan, granting access to an additional $1.3bn. The RSF aims to support Pakistan’s efforts to build climate resilience, a growing concern for the country in the wake of increasingly frequent extreme weather events.

In a statement following the board meeting, the IMF acknowledged Pakistan’s efforts in restoring macroeconomic stability, highlighting a sharp reduction in inflation — now at its lowest level since 2015 — alongside improved financial conditions and a strengthened external account.

However, the Fund also underscored persistent structural weaknesses in the economy, including a narrow tax base, weak governance frameworks, and underinvestment in key social sectors such as health, education, and infrastructure.

The SBP said the latest IMF inflow would bolster Pakistan’s external buffers and support the country’s reform agenda, which is aimed at fostering sustainable and inclusive growth.

Analysts believe the disbursement will also provide relief to the balance of payments and restore investor confidence, which had been shaken amid external financing concerns.

Pakistan, IMF to begin online budget 2025-26 talks

On the other hand, Pakistan and the International Monetary Fund (IMF) are set to commence virtual talks today (Wednesday) to begin detailed discussions on the federal budget for the fiscal year 2025-26.

According to official sources, the initial phase of the discussions will be conducted online from May 14 to 16, after which the IMF delegation is expected to arrive in Islamabad, with policy-level talks likely to continue till May 23.

The consultations form part of Pakistan’s commitments under the Extended Fund Facility (EFF), as the government seeks to finalise new fiscal targets in agreement with the global lender. These talks are seen as critical ahead of the July 1 start of the new fiscal year.

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Finance Minister Muhammad Aurangzeb, in an earlier statement, said the federal budget would be finalised within the next three to four weeks, and that talks with the IMF would centre on setting a credible fiscal path, expanding the tax base, and undertaking key structural reforms.