The International Monetary Fund (IMF) has warned that inflation in Pakistan could rise in the coming years. On Wednesday, the IMF projected inflation to climb from 4.5 percent to 6.3 percent. By June 2026, it could potentially reach 8.9 percent. The report highlights growing concerns over rising prices in the country.
The IMF also released updated economic growth projections for Pakistan. The current fiscal year is expected to see a 3.2 percent growth rate. Unemployment is projected to ease slightly, falling from 8 percent to 7.5 percent. Officials say the modest improvement may support economic stability.
Fiscal indicators were also discussed in the report. The tax-to-GDP ratio is projected to increase to 16.3 percent in FY2026, up from 15.9 percent in FY2025. The fiscal deficit is expected to narrow to 4 percent, compared with 5.4 percent last year. However, Pakistan’s debt burden is projected to remain high at 69.6 percent of GDP.
The IMF highlighted Pakistan’s twin challenge of controlling inflation while sustaining economic growth. Authorities are urged to implement policies that balance rising prices with fiscal stability. The report emphasizes careful monitoring of economic and energy sector reforms. Officials must maintain momentum to avoid future financial risks.
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Earlier, the IMF Executive Board approved $1.2 billion for Pakistan under its dual-track bailout program. The bailout includes a 37-month Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF). The funds will be transferred immediately to support Pakistan’s economic recovery and climate-focused initiatives.
The IMF praised Pakistan for timely implementation of economic and energy sector reforms. The statement highlighted the country’s commitment to structural adjustments. Analysts say the reforms are essential to stabilize inflation and public finances. The funds aim to strengthen fiscal discipline and promote sustainable growth.
The approval came after the IMF Executive Board convened in Washington on Monday. The board emphasized that the financial support will assist Pakistan in meeting budgetary and economic targets. The report signals confidence in Pakistan’s reform measures and commitment to fiscal responsibility. Policymakers are expected to continue monitoring inflation and growth trends closely.