While responding to a question regarding Pakistan’s progress in meeting terms set by the Fund, IMF Communications Director Julie Kozack heralded its economic stabilisation under the Extended Fund Facility, highlighting a primary surplus of 1.3% of GDP, easing inflation, and a current account surplus for the first time in over a decade. Still, these metrics, often lauded by technocrats, do not align with the ground realities faced by the average Pakistani.
What is referred to as stabilisation has largely come at the expense of ordinary citizens, reflecting a trend of demand destruction rather than genuine economic growth. Yet Pakistan’s potential remains intact. While foreign direct investment saw a staggering decline of 51% between July and January, our resilient entrepreneurial spirit remains intact. Support from long-time allies, even with $12 billion in reserve rollovers, reveals a window for meaningful change if decisive actions are taken.
Notwithstanding optimism, we cannot close our eyes to the beleaguered agricultural sector, especially in Punjab and Sindh, where wheat cultivation plummeted from 10.37 million hectares to 9.1 million. Despite facing immense challenges from climate issues and market shocks, our farmers have continued to provide for the nation. It is essential to honour support prices and streamline procurement processes, ensuring our agricultural backbone can not only survive but thrive under the right conditions.
Food insecurity now plagues 7.5 million rural Pakistanis, exacerbated by a staggering increase in sugar imports and sharply declining rice exports. However, this trade imbalance is not insurmountable. With improved water governance, modern storage infrastructure, and fair market access, we can restore balance in our agro-exports. Central to this recovery must be a commitment to placing our farmers at the heart of economic planning.
Fiscal policies require realignment with our national priorities. For instance, in FY26, debt servicing will consume Rs8.2 trillion, while education receives a meager 1.8% of GDP. By re-evaluating elite exemptions, adequately taxing under-reported wealth, and digitising revenue collection, we can create new fiscal space that does not stifle growth. This reform is not beyond reach. Even today. It merely requires the political will to see it through.
While the Special Investment Facilitation Council (SIFC) was established to counter bureaucratic inertia, it must operate transparently. Genuine attraction of capital will only occur when action is taken in the open, with equal consideration of provincial interests in line with the spirit of the 18th Amendment.
Moreover, Pakistan’s digital economy presents vast potential, with IT exports reaching $3.8 billion and expanding broadband access cutting through bureaucratic red tape. In order for this transformation to be inclusive, we must avoid policies that stifle innovation, such as taxing solar panels or imposing burdensome compliance measures on small to medium enterprises.
Pakistan’s struggles are not due to a lack of capacity but rather a result of a politicised economy. Elite capture, narrow taxation and policy volatility have repeatedly undermined growth cycles. Nonetheless, this moment presents an opportunity for significant change–an opportunity to break free from extractive politics and foster a more equitable system. *