UPSC Prelims Practice Questions — Pakistan is set to raise its IMF-backed defence Budget by nearly PKR 100 bn

Q1. In the context of Pakistan's ongoing IMF programme, the Resilience and Sustainability Facility (RSF) is best described as:

  • A. Affordable longer-term financing to help vulnerable countries undertake macro-critical reforms addressing prospective balance-of-payments risks such as climate change
  • B. Short-term, rapid-disbursing support to meet an immediate foreign-exchange liquidity crisis without any policy conditionality
  • C. A concessional facility available exclusively to low-income countries already in debt distress
  • D. A one-off grant to finance post-disaster reconstruction that carries no repayment obligation

Q2. Under IMF procedures, the completion of a programme review for Pakistan and the authorisation of the associated tranche disbursement are formally carried out by which organ of the IMF?

  • A. The Executive Board
  • B. The Board of Governors
  • C. The International Monetary and Financial Committee (IMFC)
  • D. The Development Committee

Q3. The figure of about PKR 2.665 trillion cited as Pakistan's projected FY2026-27 defence allocation is drawn from which document?

  • A. The IMF staff report accompanying completion of the Third EFF / Second RSF review (2026)
  • B. The document approving Pakistan's RSF arrangement in May 2025
  • C. The IMF Articles of Agreement
  • D. The World Bank's Country Partnership Framework for Pakistan

Q4. With reference to the defence budget figures projected for Pakistan in the 2026 IMF staff report, consider the following: 1. The FY2025-26 defence allocation stood at about PKR 2.564 trillion. 2. The FY2026-27 defence allocation is projected at about PKR 2.665 trillion. 3. The projected year-on-year increase is of the order of about PKR 100 billion. 4. Defence spending is projected to fall to about 6% of total federal expenditure. Which of the above is/are NOT correctly stated?

  1. The FY2025-26 defence allocation stood at about PKR 2.564 trillion.
  2. The FY2026-27 defence allocation is projected at about PKR 2.665 trillion.
  3. The projected year-on-year increase is of the order of about PKR 100 billion.
  4. Defence spending is projected to fall to about 6% of total federal expenditure.
  • A. 1 and 2
  • B. 3 only
  • C. 4 only
  • D. 2 and 4

Q5. Consider the following milestones relating to Pakistan's IMF arrangements: 1. The staff-level agreement on the Third EFF review was reached on 27 March 2026. 2. The IMF Executive Board completed the Third EFF / Second RSF review on 8 May 2026. 3. The 28-month RSF arrangement was approved on 9 May 2025. 4. The 37-month EFF arrangement was approved on 25 September 2025. Which of the above is/are NOT correctly stated?

  1. The staff-level agreement on the Third EFF review was reached on 27 March 2026.
  2. The IMF Executive Board completed the Third EFF / Second RSF review on 8 May 2026.
  3. The 28-month RSF arrangement was approved on 9 May 2025.
  4. The 37-month EFF arrangement was approved on 25 September 2025.
  • A. 1 and 3
  • B. 4 only
  • C. 2 only
  • D. 1 and 4

Q6. For how many months is Pakistan's ongoing Extended Fund Facility (EFF) arrangement with the IMF designed to run?

  • A. 37 months
  • B. 28 months
  • C. 24 months
  • D. 48 months

Q7. A 20-year maturity with a 10½-year grace period is a defining lending term of which IMF facility?

  • A. The Resilience and Sustainability Facility (RSF)
  • B. The Extended Fund Facility (EFF)
  • C. The Stand-By Arrangement (SBA)
  • D. The Rapid Financing Instrument (RFI)

Q8. A Stand-By Arrangement (SBA), typically covering 12–24 months, may under IMF rules run for a maximum of how many months?

  • A. 36 months
  • B. 24 months
  • C. 60 months
  • D. 18 months

Q9. Consider the following statements comparing the IMF's Extended Fund Facility (EFF) and Stand-By Arrangement (SBA): 1. The EFF targets longer-term, structural balance-of-payments problems, whereas the SBA addresses short-term problems. 2. Repayment under the EFF (about 4½–10 years) is spread over a longer period than under the SBA (about 3–5 years). 3. Unlike the SBA, the EFF is available only to low-income countries. Which of the statements given above is/are correct?

  1. The EFF targets longer-term, structural balance-of-payments problems, whereas the SBA addresses short-term problems.
  2. Repayment under the EFF (about 4½–10 years) is spread over a longer period than under the SBA (about 3–5 years).
  3. Unlike the SBA, the EFF is available only to low-income countries.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q10. The Special Drawing Right (SDR), which serves as the IMF's unit of account, was created by the IMF in which year as an international reserve asset?

  • A. 1969
  • B. 1944
  • C. 1971
  • D. 1980

Q11. Pakistan's commitment to achieve a primary fiscal surplus of 1.6% of GDP in FY26 is a quantitative target anchored under which arrangement?

  • A. The IMF Extended Fund Facility (EFF) programme
  • B. The IMF Resilience and Sustainability Facility (RSF) arrangement
  • C. A World Bank Development Policy Loan
  • D. An Asian Development Bank programmatic loan