The IMF loan has prevented Pakistan from economic collapse temporarily. However, weak growth and internal political issues may make it hard to maintain stability in the long run. In September 2024, the IMF approved a $7 billion Extended Fund Facility to restore macroeconomic stability and policy credibility in Pakistan. The country has received about $3.3 billion under this program, with an additional $3.7 billion set for disbursement until the end of 2027, subject to reviews and compliance with IMF conditions.
The agreement requires Pakistan to adopt orthodox macroeconomic management practices, including fiscal consolidation and monetary policy tightening. Despite this, the country’s real GDP growth was only 2.4% in 2024 and an estimated 3.5% in 2025, with limited gains in per-capita income due to high population growth. The government’s reform efforts face challenges as opposition to IMF-backed policies grows, particularly concerning planned electricity tariff hikes.
Pakistan’s history with the IMF, having engaged in 24 programs since 1958, raises concerns about long-term effectiveness. Past patterns show compliance during crises followed by policy setbacks once pressures ease, leading to recurring imbalances. While the current program runs until 2027, there are worries about sustaining policy discipline post-IMF oversight, especially if growth disappoints closer to the 2029 general election.
Some political voices suggest an early exit from the IMF program, but substantial support for this is unlikely given Pakistan’s significant external financing needs. The government aims to maintain policy discipline until the program’s end in 2027, but challenges may arise post-conditionality expiration, potentially leading to policy relaxation or delayed reforms as seen in previous cycles.
