The International Monetary Fund (IMF) has reached a staff-level agreement with Pakistan for a new $1.3 billion loan program, alongside approving the first review of its ongoing 37-month, $7 billion bailout, signaling fresh support for the cash-strapped nation.

Announced on Tuesday, March 25, the deal awaits IMF Executive Board approval, expected to unlock an immediate disbursement to bolster Pakistan’s climate resilience and economic stability amid persistent financial woes.

The $1.3 billion package, part of the IMF’s Resilience and Sustainability Trust, aims to enhance Pakistan’s capacity to tackle climate challenges while supporting reforms under the existing Extended Fund Facility (EFF), approved in September 2024. The EFF, totaling $7 billion over 37 months, has already disbursed $1 billion, with this latest review paving the way for further installments.

Pakistan’s government, led by Prime Minister Shehbaz Sharif, hailed the agreement as a lifeline, crediting allies like China and Saudi Arabia for facilitating talks, though specifics remain undisclosed.

Pakistan, the IMF’s fifth-largest debtor with over 20 loans since 1958, faces a staggering $90 billion debt repayment burden over the next three years. Foreign reserves hover at $9.5 billion—barely two months of import cover—while inflation, though down from a 2023 peak of 38%, lingers at 12%.

The new loan ties to stringent conditions, including tax hikes and energy sector reforms, which critics warn could burden citizens further. Posts on X reflect mixed sentiment, with some lauding growth projections of 2.8% for 2025, while others decry rising taxes and a “debt trap.” As Pakistan navigates this aid, structural reforms remain key to breaking its cycle of reliance.