WASHINGTON / ISLAMABAD, May 10 — In a diplomatic setback for New Delhi, the Executive Board of the International Monetary Fund (IMF) on Friday approved two financial packages for Pakistan totaling $2.3 billion, including a new $1.3 billion Resilience and Sustainability Facility (RSF).
The approval includes the second $1 billion tranche under Pakistan’s Extended Fund Facility (EFF) and the new $1.3 billion RSF arrangement. The green light came despite India’s reported attempt to block the decision during the Executive Board meeting — a move seen as diplomatically ineffective given India’s limited 2.7% voting share at the IMF.
According to officials, Pakistan’s economic team, led by Finance Minister Muhammad Aurangzeb and Finance Secretary Imdad Ullah Bosal, worked intensively to meet the programme’s requirements after earlier setbacks. Deputy Prime Minister Ishaq Dar played a key role in securing domestic political cooperation, notably helping introduce long-pending agriculture income tax laws in Sindh and Balochistan to satisfy IMF conditions.
The IMF will immediately disburse the $1 billion EFF tranche, while the $1.3 billion under the RSF will be released over the next 28 months. With this latest disbursement, Pakistan’s total receipts under the EFF will rise to $2.1 billion.
The agreements followed mutual adjustments, including revised tax targets, new deadlines to streamline the Pakistan Sovereign Wealth Fund, and commitments to further open Pakistan’s economy to foreign investment.
Under the RSF conditions, Pakistan has agreed to introduce a carbon levy starting July and will increase water usage charges next year. Islamabad has also reluctantly committed to begin studying the phasing out of Special Economic Zones (SEZs) by 2035.
About two months ago, IMF staff reached a preliminary agreement with Pakistani authorities on the first review of the EFF and the new RSF arrangement. The government has pledged to continue fiscal consolidation efforts aimed at reducing public debt, while safeguarding social and development spending and avoiding increases in non-budgeted expenditures, signaling a halt on new supplementary grants.
The IMF approval marks a major economic milestone for Pakistan as it navigates severe regional tensions and domestic challenges, underscoring the government’s focus on stabilizing the economy amid complex geopolitical pressures.
