HomeWorldIMF denies Pakistan ‘grace time’, $1 billion tranche on hold: What it means and what comes next
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IMF denies Pakistan ‘grace time’, $1 billion tranche on hold: What it means and what comes next

The setback deepens economic uncertainty and threatens investor confidence in Pakistan at a time when policy credibility is critically low.

October 09, 2025 / 20:50 IST
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Pakistan Prime Minister Shehbaz Sharif meets with managing director of the International Monetary Fund (IMF), Kristalina Georgieva, in Paris, France, June 22, 2023.
Pakistan Prime Minister Shehbaz Sharif meets with managing director of the International Monetary Fund (IMF), Kristalina Georgieva, in Paris, France, June 22, 2023.

In a significant blow to Pakistan’s collapsing economy, the International Monetary Fund (IMF) mission has returned to Washington without signing the much-anticipated Staff-Level Agreement (SLA) with Islamabad, CNN-News18 has reported, citing top intelligence sources.

The development leaves Pakistan’s next loan tranche, estimated at around $1 billion, on hold, highlighting persistent doubts over the country’s fiscal discipline and reform commitment. Despite marathon negotiations, Islamabad’s attempts to seek “grace time” to fulfil pending pledges and structural reforms failed to convince the IMF, which expressed concerns over budget mismanagement, opaque spending, and rising defence expenditures. The setback deepens economic uncertainty and threatens investor confidence in Pakistan at a time when policy credibility is critically low.

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IMF raises concerns over Pakistan’s fiscal management

According to top sources, the IMF mission questioned Pakistan’s 20 per cent increase in defence spending for the 2025–26 fiscal year, along with an additional unexplained expenditure of nearly $2–2.5 billion over the past six months. These financial irregularities have intensified the lender’s mistrust regarding Islamabad’s transparency and fiscal responsibility. The IMF also expressed unease over special funds created for security operations, citing opaque spending mechanisms.