Pakistan has received initial approval from the International Monetary Fund (IMF) for a $1.2 billion loan. The financial package aims to support Pakistan’s economy and boost its climate reform programs.

The IMF said that $1 billion will be released under the Extended Fund Facility (EFF), while $200 million will come from the Resilience and Sustainability Facility (RSF). The deal still requires a final review from the IMF Executive Board.

💰 Financial Support During Economic Challenges

This new IMF approval arrives at a critical time. Pakistan is still recovering from deadly monsoon floods that damaged crops and destroyed homes. More than 7 million people were affected, and over 1,000 lives were lost.

The IMF review mission now expects economic growth between 3.25% and 3.5% for the current fiscal year. Earlier, it was 3.6%, but the floods reduced productivity.

As a result, this loan will help Pakistan stabilize its economy, rebuild damaged areas, and manage its fiscal position more effectively.

🌦️ Focus on Climate Recovery

The government said that climate change is making monsoon seasons stronger across South Asia. These extreme rains have caused severe flooding and crop losses in many regions.

Therefore, Pakistan plans to use IMF funds to improve climate resilience and rebuild key infrastructure. The IMF praised the authorities for maintaining financial discipline while also helping flood victims.

“The authorities are committed to protecting flood-affected communities and improving public finances,” the IMF said.

Moreover, the IMF noted that flood-related price hikes may be temporary. The State Bank of Pakistan is ready to act if inflation rises or price stability weakens.

📊 IMF Mission Visit and Progress

The preliminary agreement came after two weeks of detailed discussions between Pakistan and the IMF.

An IMF team, led by Iva Petrova, visited Karachi and Islamabad from September 24 to October 8. The mission reviewed the progress of Pakistan’s economic and climate reform programs.

According to officials, Pakistan made steady progress in fiscal management, monetary policy, and climate-related goals. Consequently, this opened the door for new funding and future collaboration with global donors.

🌍 Outlook and Next Steps

The IMF’s initial approval is a positive step for Pakistan’s recovery plan. It strengthens foreign exchange reserves, supports reconstruction projects, and helps restore investor confidence.

Once the Executive Board gives final approval, Pakistan will receive the funds within weeks. This will allow the government to rebuild flood-hit regions, control inflation, and support climate adaptation programs.

In addition, the loan will help Pakistan continue key economic reforms while balancing growth and sustainability.