An IMF payment of $1.02 billion is given to Pakistan under the Extended Fund Facility.

Days after the international lender authorised the first review of Pakistan’s ongoing loan program, the State Bank of Pakistan (SBP) reported on Wednesday that it has received the second tranche of $1.023 billion from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF).

The influx will be reflected in the nation’s foreign exchange reserves for the week ending May 16, the central bank said.

The payment comes after Pakistan’s progress under the $7 billion EFF arrangement was approved by the IMF Executive Board at its meeting on May 9 in Washington, D.C.

The board’s decision follows the Fund and Pakistani authorities reaching a staff-level agreement on March 25, 2025.

A new 28-month Resilience and Sustainability Facility (RSF) for Pakistan was also approved by the IMF, providing access to an extra $1.3 billion. With extreme weather events becoming more common, Pakistan is becoming increasingly concerned about climate resilience, which the RSF seeks to promote.

The IMF praised Pakistan’s efforts to restore macroeconomic stability in a statement released after the board meeting. It noted that inflation had dropped significantly, to its lowest level since 2015, and that financial conditions and the external account had improved.

The Fund did, however, also highlight the economy’s ongoing structural flaws, such as a small tax base, shoddy governance, and a lack of investment in important social sectors like infrastructure, health, and education.

The new IMF infusion, according to the SBP, will strengthen Pakistan’s external buffers and advance the nation’s reform strategy, which aims to promote inclusive and sustainable growth.

According to analysts, the payout will also help the balance of payments and regain investor trust that had been damaged by worries about outside funding.

However, today (Wednesday), Pakistan and the International Monetary Fund (IMF) are scheduled to start virtual negotiations to start talking in-depth about the federal budget for the fiscal year 2025–2026.

Official sources indicate that the first round of talks will take place virtually from May 14 to May 16. Following the arrival of the IMF group in Islamabad, policy-level discussions are anticipated to last until May 23.

As the government works to establish new fiscal targets in accordance with the international lender, the consultations are a component of Pakistan’s obligations under the Extended Fund Facility (EFF). Prior to the new fiscal year beginning on July 1, these discussions are seen as crucial.

In a previous statement, Finance Minister Muhammad Aurangzeb stated that the federal budget will be finished in the next three to four weeks and that the main goals of discussions with the IMF would be to establish a sustainable fiscal path, broaden the tax base, and implement significant structural changes.