The International Monetary Fund (IMF) announced on Tuesday that it has reached a staff-level agreement with Pakistan, paving the way for the release of $1.2 billion in new funding, pending approval from the IMF’s executive board.

Under the agreement, the IMF will provide Pakistan with $1 billion through its Extended Fund Facility (EFF) and an additional $200 million under the Resilience and Sustainability Facility (RSF). Once approved, the total disbursements to Pakistan under the two arrangements will rise to approximately $3.3 billion.

The IMF noted that Pakistan’s economic recovery “remains on track,” citing contained inflation, stronger external buffers, and improved financial conditions as sovereign bond spreads have narrowed sharply.

The fund said the EFF-supported program is helping the South Asian country “entrench macroeconomic stability and rebuild market confidence.”

Islamabad has committed to maintaining a tight and data-driven monetary policy while strengthening climate resilience, especially after recent catastrophic floods.

Finance Minister Muhammad Aurangzeb confirmed earlier on Tuesday that Pakistan was close to finalizing the deal, following an IMF mission’s visit last week. He added that the government intends to return to global capital markets, beginning with its first green bond denominated in Chinese yuan before the end of 2025, followed by a $1 billion international bond issuance.

The IMF’s continued support comes after its intervention in September 2024, which helped stabilize Pakistan’s $370 billion economy following a prolonged economic crisis and a sharp currency depreciation.