Pakistan’s economy is clinging to an IMF lifeline that has staved off default for now, yet structural woes and domestic unrest hint at renewed peril within a few years.
The $7 billion Extended Fund Facility, greenlit by the IMF in September 2024, seeks to anchor stability and restore trust in policies. Approximately $3.3 billion has flowed in already, with $3.7 billion more due in installments through 2027—if Islamabad toes the line during reviews.
Crafted to instill discipline, the deal also signals to Gulf allies that it’s safe to pony up more cash. Officials committed to rigorous fiscal tightening and stringent monetary controls, but growth has taken the hit.
Last year’s GDP growth scraped 2.4%, expected to inch up to 3.5% this year. Annual population surges of roughly 2% eat into these gains, leaving per capita prosperity stagnant and everyday life unchanged for most.
Such anemic momentum undermines reform efforts. Critics brand the IMF recipe as growth-killing, and resistance is swelling. Fixes for the power sector, like tariff jumps, risk fueling 1% higher inflation short-term and fraying popular backing.
Don’t forget the history: This is program number 24 since 1958, a global record. Crises prompt adherence, but relief brings relapse—policies slacken, vicious cycles restart.
Previous deals patched immediate holes without forging enduring changes or growth engines. Whispers in political circles urge ditching the program prematurely, but urgency is low. Financing gaps yawn wide, and 2029 elections grant policymakers a window of relative calm.
Oversight through 2027 should enforce compliance. Beyond that, old habits—easing austerity or shelving tough fixes—could resurface, particularly if sluggish expansion persists into election season.