Pakistan struggles: Sharif’s chaotic management is highlighted in an IMF report as Pakistan struggles to revive growth amid high debt and poor investment

Pakistan struggles: According to a media report on Wednesday, the most recent IMF forecasts for Pakistan indicate that the country’s economy has restored short-term stability, but it is still plagued by excessive debt, poor investment, and sluggish job creation.

The International Monetary Fund (IMF) released projections early on Tuesday along with a statement announcing a new disbursement of approximately USD 1.2 billion to Pakistan. According to Dawn, the country’s economic growth is expected to increase from 2.6% in FY-25 to 3.2% by FY-26, a pace that hardly keeps up with population growth in the 240.5 million-person nation.

With a USD 1,677 per capita income, this track suggests economic confinement rather than recovery.

Pakistan’s population is also still growing quickly; according to government numbers from mid-2025, it was 2.55%, although World Bank data indicates that it was between 1.8% and 1.9%.

According to the research, consumer prices are expected to have dropped significantly to 4.5% in FY-25 and are expected to increase to 6.3% in FY-26, after averaging 23.4% in FY-24.

It also said that unemployment is expected to drop just a little from 8.3% in FY-25 to 7.5% in FY-26, highlighting the present economic path’s poor ability to create jobs.

It said that although spending is anticipated to stay close to 20% of GDP, government income and grants are predicted to increase from 12.7% of GDP in FY-25 to 16.3% of GDP in FY-26.

Consequently, it is anticipated that the budget deficit would decrease from -6.8% to -4.0% of GDP. Additionally, Pakistan is expected to sustain a primary surplus that rises to 2.5% of GDP, which is a key IMF criterion.

Even with this tightening, there is still a significant amount of public debt. According to the report, government and guaranteed debt is anticipated to remain close to 76% of GDP, while total general government debt, including IMF commitments, is predicted to range between 72% and 73%.

Nearly half of the GDP is made up of domestic debt, which keeps interest rates high due to high domestic borrowing rates.

However, foreign investment is still low. It also said that throughout the period under review, foreign direct investment (FDI) is only expected to account for 0.5% to 0.6% of GDP.
After a period of severe decline, the Pakistani rupee’s 15.4% real effective gain in FY-25 indicates a move toward currency stability.

According to the study, when considered together, the IMF’s forecasts for Pakistan indicate that the immediate threat of economic collapse has diminished, but the nation is nonetheless stuck on a narrow stabilization path characterized by slow growth, high debt, and little assistance for people.

According to the study, even if the current crisis is over, there is still a problem with converting stabilization into long-term, inclusive development.