Islamabad, Pakistan – The International Monetary Fund (IMF) approved a new disbursement of $1.2 billion to Pakistan on Monday evening. This move aims to support the economy, which is facing significant structural pressures.
The IMF noted that the immediate risk of a freefall had diminished. However, it warned that the country was continuing down a narrow path of stability characterized by weak growth and high debt.
Limited economic growth
Economic growth in Pakistan is projected to rise from 2.6% in fiscal year 2024 to 3.2% by 2026. However, this rate is not keeping pace with the country’s high population growth of 2.55% annually, in a nation of 240.5 million people. Per capita income remains low at US$1,677. This reflects limited improvement rather than a broad recovery.
Volatile inflation and fragile stability
The country experienced a sharp decline in inflation, from 23.4% in 2024 to a projected 4.5% in 2025, before rising again to 6.3% in 2026, reflecting the impact of IMF policies but highlighting the fragility of monetary stability.
The unemployment rate is expected to decline slightly from 8.3% to 7.5%. Meanwhile, foreign direct investment remains weak at 0.5% of GDP.
Foreign currency reserves are also expected to rise from $9.4 billion to $17.8 billion by 2026, but this will only cover 2.7 months of imports. This reflects a relative improvement, but it remains below comfortable levels.
