The International Monetary Fund (IMF) has projected a 3.6% economic growth rate for Pakistan in fiscal year 2026-27, signaling a recovery amid regional challenges. In its latest review under the Extended Fund Facility (EFF) programme, the IMF noted that Pakistan’s economy is showing signs of stability despite global headwinds and the ongoing conflict in the Middle East.
According to the IMF report, Pakistan met several key economic targets under the EFF, which helped restore investor confidence. The Fund also forecast inflation to average 7.2% during the current fiscal year, while the unemployment rate is expected to stand at 6.9%. Foreign exchange reserves are projected to rise to $17.5 billion, up from $16 billion at the end of December.
The report highlighted that tensions in the Middle East have adversely affected Pakistan’s economy by disrupting supply chains and weakening consumer purchasing power. Rising global oil prices linked to the conflict have also contributed to higher inflation. However, the IMF praised the State Bank of Pakistan‘s timely and tight monetary policy measures, which helped contain inflationary pressures.
Public debt is projected to remain at 73.8% of GDP during the current fiscal year, while the IMF forecasts a primary surplus equivalent to 1.6% of GDP in fiscal year 2026. The Fund emphasized the need to continue rebuilding foreign exchange reserves and implement further reforms in the foreign exchange market.
To support long-term growth, the IMF urged Pakistan to promote greater competition in the business and manufacturing sectors. Sustained structural reforms, the report said, could help the country achieve durable economic expansion. The Fund also stressed the importance of maintaining adequate capital buffers within the banking sector to ensure financial stability.
On climate resilience, the IMF noted that 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 prioritize disaster prevention reforms, improve water management, strengthen climate risk monitoring, and enhance coordination between federal and provincial governments.
Pakistan recently received $1.32 billion from the IMF under the EFF and RSF programmes, according to the State Bank of Pakistan. The IMF’s positive outlook underscores the country’s gradual economic recovery, though challenges remain. The 3.6% growth projection for FY2026-27 reflects cautious optimism, contingent on continued reforms and global stability.
Source: ARY News