The International Monetary Fund (IMF) has reached a preliminary agreement with Pakistan that could provide approximately $1.21 billion (£1 billion) in financial support, the fund announced on Wednesday. This comes as Pakistan struggles with rising food and fuel costs and high unemployment rates.
The bailout deal still requires approval from the IMF’s Executive Board. Iva Petrova, an IMF negotiator, stated that Pakistan has effectively managed the repercussions of recent conflicts in the Middle East, thanks to strong policies that have helped maintain macroeconomic stability.
Pakistan’s economy recorded a 4% growth in the first three quarters of the fiscal year 2026, with a full-year growth forecast of around 3.6%, according to the IMF. However, Petrova noted that this growth was hindered by “higher energy prices and supply disruptions.” Inflation decreased to about 10.3% in September after reaching a peak in May, while core inflation remained stable.
The country continues to rely on external financing to bolster its foreign exchange reserves and to meet debt obligations. The ongoing conflicts in the Middle East leave Pakistan particularly susceptible due to its reliance on energy imports and remittances from the Gulf region. Earlier this year, economist Ahmad Mobeen from S&P Global Market Intelligence highlighted Pakistan’s vulnerability stemming from this dependence.
In recent years, Pakistan has frequently sought assistance from the IMF to address its critical balance-of-payments issues.
