By Staff Reporter
KARACHI: The International Monetary Fund (IMF) is poised to approve an immediate $1.2 billion disbursement to Pakistan in the second week of next month, providing a fresh influx of cash to the cash-strapped South Asian economy amid efforts to tackle entrenched governance weaknesses and recover from devastating floods.
The IMF’s executive board has scheduled a meeting on Dec. 8 to sign off on the funds under two concurrent programs, according to the fund’s calendar. That includes $1 billion from the $7 billion Extended Fund Facility and $200 million from the $1.4 billion Resilience and Sustainability Fund. The money is expected to hit Pakistan’s accounts on Dec. 9, lifting total disbursements under the arrangements to about $3.3 billion.
The board will hold two separate meetings that day, one for Pakistan and another for Somalia, the calendar shows. Pakistan and the IMF struck a staff-level agreement on Oct. 14 covering the second review of the EFF and the first review of the RSF. Ahead of the board’s decision, Pakistan is set to release a long-delayed Governance & Corruption Diagnostic Assessment Report compiled by an IMF technical mission — a critical structural benchmark under the EFF.
The benchmark’s original deadline was end-July, later pushed to end-August and then end-October, but it remains unmet due largely to technical and factual disagreements between Pakistani authorities and the IMF’s experts. Those issues have now been resolved, and Pakistan has assured the fund it will publish the report before the board convenes. The exercise was comprehensive, carried out by the IMF’s technical and legal teams in consultation with global organizations such as the OECD and FATF. It involved a series of back-and-forth exchanges of draft papers and discussions with various Pakistani authorities, including anti-corruption watchdogs, the superior judiciary, investigation agencies, and the ministries of finance and law, to ensure the best outcome of the international expertise, which covers more than 100 rules.
The two sides are believed to have discussed shortening the time lag between the report’s publication and a subsequent governance action plan, which would outline reform measures to plug critical vulnerabilities.
An IMF scoping mission visited Pakistan earlier this year, holding meetings at the Supreme Court of Pakistan, Law and Justice Division, Auditor General of Pakistan, parliamentarians, national accountability bureau, Federal Board of Revenue and the State Bank of Pakistan. The resulting report pinpointed gaps and weaknesses in public finance management, the tax system, and the AGPR’s efforts to identify loopholes.
Under Pakistan’s current governance framework, the majority of government officers have not been disclosing their assets and those of their family members to tax authorities or the Establishment Division, due to insufficient institutional mechanisms for accountability. Many institutions, including regulatory bodies, enjoy exemptions from such scrutiny and disclosure requirements. That has fueled widespread reports of corruption across bureaucratic and political spheres, contributing to Pakistan’s high rankings on international corruption perception indexes.
The IMF has been pushing for data-based red flags, due diligence, safeguard mechanisms, and guidelines to curb corruption and misuse of public offices, which have led to sub-optimal decision-making and hampered the country’s business and growth potential. The Paris-based Financial Action Task Force has also flagged a series of weaknesses and issued recommendations to address them. Even as it presses for governance fixes, the IMF has acknowledged Pakistan’s progress on financial and macroeconomic fronts under the EFF, which has helped entrench stability and rebuild market confidence. “The recovery remains on track, with the FY25 current account recording a surplus — the first in 14 years, the fiscal primary balance surpassing the programme target, inflation remaining contained, external buffers strengthening, and financial conditions improving as sovereign spreads have narrowed significantly,” the IMF said in announcing the staff-level agreement.
Still, flood-related losses have cast a shadow over the outlook, affecting nearly 7 million people, causing over 1,000 deaths and severely damaging housing, public infrastructure, and agricultural land — particularly hitting the agriculture sector. That has pulled down projected FY26 gross domestic product growth to about 3.25-3.5%. “The floods underscore Pakistan’s high vulnerability to natural disasters and substantial climate-related risks, and the continuing need to build climate resilience,” the IMF said, noting that the authorities’ commitments under the EFF and RSF remain strong to sustain prudent macroeconomic policies while pushing structural reforms.
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