Photo : Collected

ISLAMABAD, Pakistan, Dec 9, 2025 (BSS/AFP) - Pakistan on Tuesday welcomed the release of a further $1.2 billion in loans from the International Monetary Fund to help its economic recovery and reforms programme, calling it evidence of "hard work" undertaken after two years of financial crisis.

The IMF approved the funds at a Washington meeting Monday, bringing the total amount provided under two loan facilities -- a bailout fund and a climate sustainability fund -- to $3.3 billion.

"Pakistan's reform implementation... has helped preserve macroeconomic stability in the face of several recent shocks" such as devastating flooding last summer, the fund's deputy managing director Nigel Clarke said in a statement.

Economic growth is projected to rise to 3.2 percent in the fiscal year to June 2026, after an estimated 3.0 percent last year.

Inflation meanwhile is set to average 6.3 percent this fiscal year, a huge drop from the 23.4 percent average in the year to June 2024.

But Clarke also called for further overhauls and privatisations of state-owned firms, and continued investment in climate projects to reduce "vulnerability to extreme weather events".

New efforts to combat endemic corruption are also needed, Clarke said, while welcoming a recent government-commissioned report on fraud as a "welcome step in accelerating government reforms".

In a statement, Prime Minister Shehbaz Sharif called the new loans "proof that Pakistan is implementing the necessary steps for economic stability and growth".

"Bringing the country back from the brink of default and putting it on the path of stability and development was a difficult phase, for which everyone made sacrifices."

Pakistan nearly defaulted on its massive debt in 2023 before securing the IMF bailout, called the Extended Fund Facility, that is to total $7 billion in the coming years.

As part of the deal it also pledged to tackle corruption including money-laundering and alleged financing of terrorism in the country.

In November the IMF published a review conducted at the request of the Pakistani government, which found "persistent and widespread corruption risks embedded in a heavily state-dominated economy".

It noted the "significant adverse effects on economic growth, investment, and public trust", urging "actions to advance the rule of law and the functioning of anticorruption institutions".

The South Asian nation is one of the largest debtors to the IMF after Argentina and Ukraine. It also secured a 10-year, $20 billion financing package from the World Bank in January.