Pakistan’s federal budget for 2026-27 will shape the country’s economic future as it approaches the end of its Extended Fund Facility with the International Monetary Fund (IMF) in 2027. Therefore, policymakers must treat this budget as more than a routine fiscal exercise. They must use it to build a clear path from stabilisation to sustainable growth.
From stabilisation to sustainable growth
Over the past year, the government has met key IMF performance targets. It has reduced inflation, stabilised the exchange rate, and improved fiscal discipline. As a result, macroeconomic stability has gradually returned. However, stability alone will not create jobs or raise incomes.
Now, the government must push forward structural reforms. It should continue tariff rationalisation, tax policy reforms, and digitisation of the Federal Board of Revenue. In addition, it must advance energy sector restructuring and privatisation plans. At the same time, policymakers must respond to global challenges. Protectionism is rising, capital flows are tightening, and regional competitors such as India and Bangladesh are expanding export access. Consequently, Pakistan must strengthen its export base and improve competitiveness before its GSP-Plus review in 2027.
Security and governance reforms remain essential
Economic revival also depends on internal stability. Persistent security concerns in Balochistan, Khyber Pakhtunkhwa, and even Islamabad have unsettled investors. Without restoring confidence, mineral development, energy exploration, and Gwadar’s industrial potential will remain underutilised.
Moreover, the government must improve coordination among federal and provincial institutions. The National Economic Council and the Council of Common Interests should actively align fiscal and development priorities. Ministries must adopt performance-based management and focus on measurable outcomes.
Ultimately, the 2026-27 budget must send a strong signal. Pakistan should prepare to graduate from IMF-led stabilisation toward self-sustaining growth driven by productivity, exports, and private investment.
