Pakistan wants to leave the IMF program by having a stable economy, and they’ve made some progress with more foreign money and lower prices. But to be fully independent, they need to keep making changes, handle big debt payments until mid-2026, and not ask for more help. IMF experts and analysts say Pakistan still depends on outside support and has problems like corruption that make it hard to fully break away.
There’s hope for better growth by 2026, but this is more about ending the current IMF plan than stopping all future help, because the country still has financial pressure. Pakistan has done well with more foreign reserves and lower inflation, which are important steps toward being self-reliant. In the 2024-25 fiscal year, Pakistan showed a lot of improvement in economic stability, with falling inflation, better foreign exchange reserves (now covering 2.5 months of expenses), fiscal control (a big primary surplus), and a current account surplus. These improvements came from strong reforms under the IMF program, careful money and spending policies, and higher remittances, which led to better ratings from global agencies like Fitch, S&P, and Moody’s. While growth improved a little (around 3%), there are still challenges in areas like farming and making sure the growth is long-lasting and benefits everyone through deeper changes and more investment.
Pakistan’s current programs are mainly focused on big infrastructure projects, like the China-Pakistan Economic Corridor (CPEC). Progress is continuing on major road networks, such as the KKH Alternate Route and the Peshawar-DI Khan Motorway, as well as energy projects. The “Action Plan 2025-2029” is helping to guide future steps. There’s also work on digital transformation, education reform, and building economic resilience. Significant progress has been made in CPEC transport links, and tax collection increased in fiscal year 2025. Large-scale projects like the ML-1 and the Karachi Circular Railway are still ongoing, though implementation varies. Better governance is needed in areas like education, health, productivity, innovation, digital development, and climate resilience to reach such goals. The IMF says that structural reforms are very important for long-term success. These include fighting corruption, improving tax collection, and strengthening governance. Pakistan is pushing for continuous reforms to focus on growth through exports, strict financial management, and structural changes. Key areas include expanding the tax base, privatizing government-owned companies, increasing exports through trade reforms and improved trade processes, making the energy sector more efficient (by lowering debt and updating power purchase agreements), improving governance, and investing in people’s skills. All these steps are meant to break the cycle of economic ups and downs and create lasting stability.
Pakistan is dealing with a big debt problem. By mid-2025, the total public debt is expected to go beyond PKR 80 trillion, which is about $287 billion. A large part of the government’s income is used just to pay interest on this debt, which can take up to 75% of all the taxes collected. This is putting a lot of pressure on the government’s finances and making it hard to maintain a stable economy. The situation has come about because of long-term budget shortfalls, more loans taken for development and crisis response, and heavy borrowing from both local and foreign sources like China and international lenders. This has made the country’s debt level very high, with the debt compared to the size of the economy reaching about 70%. Even though there have been some small steps to lower the total amount of debt, the country is still at risk. Pakistan has been asking for help from the IMF for a long time, which suggests it is likely to turn back to the Fund again without making serious and steady changes. In Pakistan’s economy, the term “cyclic dependency” is often used to describe two main problems that are connected: the circular debt crisis in the energy sector and the repeated use of IMF bailouts to fix long-lasting structural issues. The main reason for this gap between the cost of making power and the money collected is inefficient tariff subsidies, old infrastructure that causes big losses in the power lines and power theft, and not doing consistent reforms. The financial stress on the energy sector causes frequent power cuts, less investment in infrastructure, and slows down overall economic growth. The total circular debt is about Rs 5.5 trillion.
Corruption in Pakistan is a big problem that runs deep through the government system. It shows up as bribery, favoritism, and powerful people taking control of important decisions. This stops the country from growing economically and makes people lose faith in their leaders. Even though there are anti-corruption groups like NAB, they don’t work well because of weak laws, political control, and poor enforcement. Real change needs stronger institutions, more transparency, and better accountability. Corruption is not just a small issue—it’s everywhere, from government work to the courts, businesses, and everyday services. It affects big projects and even basic things people need. Anti-corruption agencies like NAB and FIA don’t have enough power, resources, or teamwork, and they often get influenced by politics. Laws that are meant to help, like the Freedom of Information Act, aren’t properly followed. People who report wrongdoing aren’t protected, and the public isn’t involved enough. Pakistan has good laws and anti-corruption groups, and there have been recent efforts to improve things, like leaving the FATF grey list. But there’s a big gap between what the laws say and how they are actually applied. There’s not enough political will to fight against those in power. To make progress, anti-corruption and judicial bodies need to be stronger, there should be more political accountability through better elections and campaign finance rules, and the government should use technology and local authorities more effectively. In short, corruption is weakening Pakistan’s stability and remains a key challenge for improving government systems. Right now, efforts to fix this problem are not enough because there are strong structural and political problems that are hard to overcome. Pakistan wants to leave its current agreement with the IMF by 2026, but real economic freedom from the Fund will take more than just time. It will need ongoing, tough reforms to solve deep-rooted issues and handle a large amount of debt.
