Prime Minister Shehbaz Sharif addresses a ceremony in Islamabad to mark International Youth Day on August 12, 2025. Photo: Express
Prime Minister Shehbaz Sharif confirmed a staff-level agreement with the International Monetary Fund for the disbursement of $1.2 billion and expressed hope that it would be the last such program for Pakistan.
Chairing a cabinet meeting on Thursday, he said the time has come to “free ourselves from the burden of debt.” Hard work is the first condition for independence and national dignity,” Shehbaz said, adding that Pakistan’s economic stability would strengthen its global voice and respect.
The IMF on Wednesday announced the agreement to release $1.2 billion in upcoming loan tranches after Islamabad, for now, accepted the old pre-flood budget targets and released the governance report ahead of the board meeting.
Following the board’s approval, Pakistan will have access to around $1 billion under the SEF and another $200 million under the RSF, Iva Petrova said. In total, the IMF will disburse $3.1 billion under the SAF of the $7 billion deal.
Read more: IMF unlocks $1.2 billion after government reviews pre-flood promises
Pakistan and the IMF negotiated for three weeks to reach a staff-level agreement. One of the irritants was the lack of finalization of fiscal figures reflecting the impact of the floods on the budget.
Additionally, the IMF on Tuesday projected Pakistan’s economic growth rate at 3.6% for the current fiscal year, as Finance Minister Muhammad Aurangzeb expressed hope that a staff-level agreement would be reached this week with the lender for two tranches worth $1.2 billion.
The IMF released Washington’s World Economic Outlook report, which puts Pakistan’s economic growth rate at 3.6%. But he clarified that Pakistan’s economic projections “do not yet reflect the impact of the summer 2025 floods, the impact of which is still being assessed.”
Also read: IMF projects Pakistan’s growth at 3.6%
The adverse implications of the floods on economic growth, inflation, the budget and the external sector are one of the outstanding issues hindering the finalization of the staff-level agreement to complete the second review of the rescue package, according to government sources.
Contrary to the forecast of 3.6% economic growth, sources said that during inconclusive discussions last week, IMF staff had projected growth of 3% to 3.5%.
They said the IMF’s view was that the recent floods have weighed on the economic outlook, particularly for the agricultural sector, given the damage to Kharif’s main crops.
The government has already adjusted its ambitious target downwards from 4.2% to 3.5%, while the World Bank has made a forecast of 2.6% for the same reason.
