Pakistan secures $1.2 billion IMF agreement as inflation eases to 10%

The International Monetary Fund (IMF) and Pakistani authorities reached a staff-level agreement on Wednesday, 7 October, clearing the path for the release of approximately $1.2 billion in funding. The deal concludes the first review under the current Extended Fund Facility and now awaits final approval from the IMF Executive Board. Economic recovery and inflation targets IMF negotiator Iva Petrova confirmed that Pakistan has maintained macroeconomic stability despite external pressures. Data released by the lender shows Pakistan recorded a real GDP growth of 4 per cent during the first three quarters of the 2026 fiscal year. However, overall growth for the full fiscal year is estimated to moderate to 3.6 per cent due to high energy costs and global supply chain disruptions. Inflationary pressures, which sparked nationwide protests over food and fuel costs earlier this year, have shown signs of easing. According to the IMF, headline inflation peaked in May before dropping to approximately 10.3 per cent in September. Core inflation remained contained during this period, despite volatility in global energy shipments caused by regional conflict. Fiscal measures and loan conditions The agreement follows significant policy shifts by Islamabad, including a recent hike in petroleum taxes to meet the lender's revenue targets. These measures were mandatory for Pakistan to secure the $1.2 billion payout, as the government seeks to stabilize an economy burdened by debt and rising…