The latest International Monetary Fund (IMF) projections for Pakistan suggest that the immediate risk of economic free fall has eased but the country remains locked into a narrow stabilisation path marked by weak growth, heavy debt and limited relief for households.
Projections by the Fund, which late on Monday approved a fresh disbursement of around $1.2 billion to Pakistan, showed that Pakistan’s economic growth was projected to inch up from 2.6 per cent in FY2024 to 3.2pc by FY2026, a pace that barely matches population growth in the country of 240.5 million people.
With a per capita income of $1,677, this trajectory points more to economic containment than recovery.
Pakistan’s population also continues to grow at a high pace, with mid-2025 official figures citing 2.55pc, while World Bank data points to 1.8–1.9pc. Though slightly lower than past peaks, the rate remains a significant development challenge.
Pakistan, however, appears to have made the most striking turnaround in inflation. After averaging 23.4pc in FY2024, consumer prices are estimated to have fallen sharply to 4.5pc in FY2025, and projected to rise to 6.3pc in FY2026.
End-period inflation is also projected to ease from 12.6pc in FY2024 to 3.2pc in FY2025, before climbing to 8.9pc in FY2026. The disinflation reflects tight monetary policy, lower subsidies and compressed demand under the IMF programme, though the projected rebound suggests price stability remains fragile.
Labour market conditions offer limited comfort. Unemployment is projected to fall only modestly from 8.3pc in FY2024 to 7.5pc in FY2026, underscoring the weak job-creating capacity of the current growth path.
On the fiscal front, the adjustment underway is substantial. Government revenue and grants are projected to rise from 12.7pc of the gross domestic product (GDP) in FY2024 to 16.3pc by FY2026, while expenditure is expected to remain near 20pc of GDP.
As a result, the budget deficit is projected to narrow from -6.8pc to -4.0pc of the GDP. Pakistan is also projected to maintain a primary surplus rising to 2.5pc of the GDP, a central IMF benchmark.
Despite this tightening, the public debt burden remains heavy. Total general government debt, including IMF obligations, is projected to hover around 72–73pc of the GDP, while government and guaranteed debt is expected to stay near 76pc.
Domestic debt accounts for nearly half of the GDP, keeping interest costs elevated amid high domestic borrowing rates.
