IMF projects 3.6% growth for Pakistan in FY2026-27

The International Monetary Fund (IMF) has stated that Pakistan’s economy is showing signs of stability following the latest review under its loan programme, despite challenging global conditions and the ongoing conflict in the Middle East.

According to the IMF report, Pakistan succeeded in meeting several key economic targets under the Extended Fund Facility (EFF) programme, helping restore investor confidence amid regional and international uncertainty.

The IMF projected Pakistan’s economic growth at 3.6 per cent for fiscal year 2026, while inflation is expected to average 7.2 per cent during the current fiscal year. The unemployment rate is forecast to stand at 6.9 per cent.

The report noted that tensions in the Middle East adversely affected Pakistan’s economic growth by disrupting supply chains and weakening consumer purchasing power.

Rising global oil prices linked to the conflict also contributed to higher inflation in the country.

Pakistan’s foreign exchange reserves are expected to rise to $17.5 billion, while reserves had already reached $16 billion by the end of December, according to the report.

Public debt is projected to remain at 73.8 per cent of GDP during the current fiscal year.

The IMF also forecast that Pakistan could achieve a primary surplus equivalent to 1.6 per cent of GDP in fiscal year 2026.

Pakistan receives $1.32bn from IMF under EFF, RSF programs: SBP

The Fund praised the State Bank of Pakistan’s timely and tight monetary policy measures, stating that they had helped contain inflationary pressures. However, it stressed the need to continue rebuilding foreign exchange reserves and implement further reforms in the foreign exchange market.

The report emphasised that Pakistan must promote greater competition in the business and manufacturing sectors to support long-term economic growth. It added that sustained structural reforms could help the country achieve durable economic expansion.

The IMF further highlighted the importance of maintaining adequate capital buffers within the banking sector to ensure financial stability.

On climate resilience, the IMF said the 28-month Resilience and Sustainability Facility (RSF) programme would help Pakistan tackle climate-related challenges and improve preparedness for natural disasters.

The report urged authorities to prioritise disaster prevention reforms, improve water management, strengthen climate risk monitoring, and enhance coordination between federal and provincial governments.