By Staff Reporter
KARACHI: The State Bank of Pakistan on Wednesday received a $1.023 billion infusion from the International Monetary Fund, a critical lift for its foreign exchange reserves amid economic reforms and a fraught standoff with India.
The funds, equivalent to SDR 760 million, represent the second disbursement under a $7 billion Extended Fund Facility (EFF) and will appear in the State Bank of Pakistan’s reserves for the week ending May 16.
The SBP has received SDR 760 million ($1,023 million) in value on 13 May 2025 from the IMF,” the central bank said in a statement. “The amount will be reflected in SBP’s foreign exchange reserves for the week ending on 16 May 2025.”
The IMF executive board approved the payout on May 9 after completing the first review of the EFF, dismissing India’s efforts to block the funds. New Delhi had pressed the IMF to reconsider loans to Pakistan, a tactic Islamabad labelled as an attempt to derail its economic recovery.
The approval brings total disbursements under the three-year program to about $2 billion.
The funds arrived as tensions between the nuclear-armed neighbours flared. An April 22 attack in Pahalgam, a resort town in occupied Kashmir, killed 26 tourists. India blamed Pakistan for the assault, a claim Islamabad denied and countered with an offer for an independent international investigation.
The dispute escalated last Wednesday when India fired missiles at Pakistani cities. Pakistan shot down five Indian fighter jets, sparking four days of clashes with jets, missiles, drones, and artillery. The conflict, which claimed nearly 100 lives, marked the worst fighting since the 1999 Kargil War, fueled by the Kashmir dispute over a territory both nations claim since 1947.
A ceasefire, brokered by US President Donald Trump and announced Saturday evening, halted the violence.
Pakistan secured the IMF tranche after a staff-level agreement on March 25, part of the EFF’s first biannual review. The deal binds Islamabad to reforms: a carbon levy, higher electricity tariffs, elevated water prices, and automobile sector liberalisation, all linked to future payouts under the 39-month program.
The agreement also approved a 28-month, $1.3 billion Resilience and Sustainability Facility (RSF) for climate projects, with funds tied to policy milestones. The $7 billion EFF, finalised in July, supports Pakistan’s economic stabilisation.
An IMF mission in early June will shape the 2025-26 budget, with fiscal consolidation underway. Reforms, including the carbon levy and water price hikes, take effect July 1.
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