Islamabad (Web Desk): According to a recent report by the International Monetary Fund (IMF), Pakistan has achieved most of its economic targets, signaling growing stability in the country’s economy, while current inflation is considered temporary.
The report highlights that over the past year, Pakistan’s foreign exchange reserves have risen from $9.4 billion to $14.5 billion.
During the same period, the IMF provided Pakistan with financial support amounting to $1.2 billion.
Looking ahead, the IMF expects further growth in reserves and has recommended several measures to maintain economic stability.
The IMF has warned that Pakistan’s balance of payments deficit is expected to widen in the coming years, potentially reaching $3.253 billion by 2029–30 after the current programme ends, signaling the possible need for a new IMF arrangement.
The report highlights that contingency measures remain crucial for safeguarding fiscal targets. If revenue falls short by December 2025, the government plans to raise excises on fertilizers and pesticides by five percentage points, introduce levies on high-value sugary items, broaden the sales tax base, and adjust spending accordingly.
The authorities have also assured the IMF of plans to fully deregulate the sugar sector, continue power sector tariff adjustments, reduce losses, and cut costs. A rollout of point-of-sale systems for 40,000 large retailers is planned over two years, while all provinces will move toward harmonized sales tax procedures.
This fiscal year, spending on new development projects will be capped at 10% of the Public Sector Development Programme (PSDP), with priority given to completing ongoing schemes worth about Rs2.5 trillion. Next year, climate-related projects will receive greater focus, and public procurement will shift to digital platforms, with compliance reports submitted to the president by March 2026.
Social protection programs will see the Kafalat cash transfer rise to Rs14,500 per quarter from January 2026, reaching 10.2 million families, with biometric verification remaining mandatory. The e-wallet system is expected to launch by June 2026.
On energy reforms, tariff rebasing will move from July to January 2026, and the government aims to reduce circular debt to zero inflow by FY2031, including settling Rs1.2 trillion owed to banks and eliminating Rs128 billion in interest to independent power producers.
The IMF noted that income tax filings rose from 5.2 million in FY2024 to an expected 7 million in FY2025. Foreign exchange reserves improved from $9.4 billion to $14.5 billion, and Pakistan recorded a primary surplus of 1.3%, marking the first current account surplus in 14 years. Reforms to boost revenue and reduce debt are ongoing.
Inflation, driven by post-flood food prices, is expected to ease to 7% this year, with the IMF stressing tight monetary policy and flexible exchange rates to manage shocks. The 2022 floods underscored Pakistan’s climate vulnerability, affecting seven million people, claiming nearly 1,000 lives, and causing extensive damage, highlighting the need for better disaster preparedness and water management.
The IMF also emphasized reforms in taxation, governance, state-owned enterprises, and energy to ensure long-term growth. Strengthening the investment climate, improving transparency in foreign exchange markets, and continuing power sector reforms were also highlighted as critical.
The report concludes that Pakistan’s recovery remains fragile but is moving forward under the current programme. Sustained reforms and consistent policies will be key to reducing debt, increasing revenue, and supporting economic growth in the years ahead.