Pakistan government secures $1.3 billion loan from IMF for climate resilience

In March 2025, Pakistan announced a significant agreement with the International Monetary Fund (IMF), marking the achievement of a staff-level agreement regarding the first review of a 37-month bailout programme. This agreement allows the government to unlock a new $1.3 billion climate resilience loan, which spans 28 months and aims to aid in addressing severe climate-related challenges the country faces. Additionally, upon approval from the IMF board, Pakistan is expected to access $1 billion under the extended financial facility, bringing total disbursements under the programme to $2 billion. Nathan Porter, mission chief to Pakistan, highlighted the progress made by the country in restoring macroeconomic stability despite facing a challenging global environment. Over the past 18 months, Pakistan has focused on creating stronger fiscal policies, reducing inflation, and improving financial conditions, which have played a crucial role in stabilizing the economy. While inflation has seen declines and reached its lowest point since 2015, there remain concerns regarding elevated downside risks stemming from geopolitics, commodity prices, and global financial conditions. The government of Pakistan, led by Prime Minister Shehbaz Sharif, expressed optimism about the outcomes of the implemented policies devised through the IMF agreement. The finance ministry announced that while economic growth remains moderate, measures have been taken to further consolidate fiscal stability, assist with social spending, and strengthen public finances to encourage sustainable economic recovery. The loan agreement also symbolizes the government's commitment to ongoing structural reforms and a focus on addressing climate change through necessary adaptation measures. Overall, the arrangement reflects Pakistan's determination to enhance resilience against climate risks while pursuing economic stabilization measures. Despite facing difficulties arising from inflation and other pressing issues, the government plans to execute reforms associated with taxation, energy, and state-owned enterprises in a bid to maintain productive growth and build a robust economic future.