The International Monetary Fund (IMF) announced on Tuesday that it has reached a staff-level agreement with Pakistan on its loan program, paving the way for the South Asian nation to access $1.2 billion pending approval from the fund’s executive board.

Under the agreement, Pakistan would receive $1 billion through the Extended Fund Facility (EFF) and $200 million via the Resilience and Sustainability Facility (RSF), bringing total disbursements under the two programs to approximately $3.3 billion. IMF lending programs require regular reviews, with each approved tranche unlocking the corresponding loan payment.

“Supported by the EFF, Pakistan’s economic program is entrenching macroeconomic stability and rebuilding market confidence,” the IMF said in a statement. The fund highlighted that Pakistan’s recovery remains on track, with inflation contained, external buffers strengthened, and financial conditions improving, as sovereign spreads have narrowed significantly.

The IMF also noted Pakistan’s commitment to tight, data-driven monetary policy and enhanced climate resilience, particularly following devastating floods earlier this year.

Earlier on Tuesday, Pakistan’s Finance Minister Muhammad Aurangzeb said the country planned to finalize a preliminary deal with the IMF after an IMF team left Pakistan last week without signing agreements. Aurangzeb added that the government intends to return to capital markets, beginning with its first green bond denominated in Chinese yuan before year-end, followed by at least a $1 billion international bond.

The IMF’s support in September 2024 played a key role in stabilizing Pakistan’s $370 billion economy, which had been severely impacted by a financial crisis that caused a sharp depreciation of the national currency.