ISLAMABAD: The International Monetary Fund (IMF) has forecast Pakistan’s economy to grow by 2.6% during the current fiscal year, with steady improvements expected in the coming years.
These projections were detailed in the IMF’s newly released Pakistan Country Report, which outlines key economic indicators, fiscal policies, and structural reforms agreed upon with the government.
According to the report, GDP growth is expected to rise to 3.6% in 2025–26 and further to 4.1% in 2026–27. From 2027 through 2030, the economy is projected to grow at an average rate of 4.5%, signaling a gradual but stable recovery.
Inflation and Fiscal Management
Inflation is expected to remain moderate at 5.1% for the current fiscal year but is forecast to increase to 7.7% in 2025–26. Between 2026 and 2030, average annual inflation is projected to hover around 6.5%.
To address fiscal imbalances, the government has committed to stringent expenditure controls. This includes an Rs87 billion reduction in the Public Sector Development Programme (PSDP) and a crackdown on non-essential spending.
Additionally, Rs54 billion worth of energy subsidies will be cut, and Rs188 billion from emergency reserves will remain untouched to maintain fiscal discipline. Despite these adjustments, the government plans to sustain total core spending at Rs15,958 billion while safeguarding funding for critical social sector programs.
Debt Reduction and Fiscal Targets
A major takeaway from the IMF report is the projected improvement in Pakistan’s debt-to-GDP ratio. The figure is expected to fall to 71.9% by fiscal year 2025–26 and continue declining to 61% by 2030.
Pakistan has also reiterated its target of achieving a primary budget surplus of 1.0% of GDP—a key milestone for long-term financial stability. Non-tax revenue is projected to reach 3% of GDP in the same period.
Revenue Reforms and Tax Collection
On the revenue front, the IMF stressed the importance of enhancing tax collection. If revenue targets are missed, the government has agreed to implement proportional spending cuts.
The Federal Board of Revenue (FBR) has revised its target for the current fiscal year to Rs12,332 billion, aiming to bring tax revenue up to 10.6% of GDP.
These projections and policy commitments reflect Pakistan’s broader strategy to stabilize the economy, control inflation, and lay the groundwork for sustainable growth in the years ahead.
