The IMF’s $7 billion package has pulled Pakistan back from the economic brink, but tepid expansion and political volatility cast shadows over medium-term prospects.
Approved last September, the Extended Fund Facility targets broad stability and policy rehab. Pakistan has pocketed $3.3 billion to date; the balance arrives in biannual doses by 2027’s close, contingent on passing muster and sticking to terms.
It’s a framework for rigor, doubling as a cue for Gulf benefactors to extend aid. In exchange, a vow for textbook economics: belt-tightening budgets and hawkish interest rates. Payoff? Muted economic pulse.
2024 saw GDP rise a mere 2.4%; 2025 forecasts 3.5%. Population boom at 2% yearly dilutes this, stifling income growth per head and real welfare advances.
Fragile backdrop hampers ambitious overhauls. The IMF’s tough-love approach draws fire as growth-hostile, with opposition hardening. Energy reforms via price hikes threaten a 1% inflation jolt soon, testing public tolerance.
History tempers optimism—this marks the 24th IMF engagement post-1958, unmatched worldwide. Crisis mode yields obedience; calmer waters invite drift, reviving demons down the line.
Prior pacts stabilized briefly but seldom delivered deep reforms or growth vitality. Political murmurs push for quick escape, yet traction is slim amid yawning funding voids and distant 2029 polls, affording disciplinary leeway.
IMF watch until 2027 likely sustains orthodoxy. Thereafter, allure of populism—slacking fiscal grips or postponing painful steps—may prevail anew, above all if growth lags into electoral crosshairs.