ISLAMABAD: Prime Minister Shehbaz Sharif on Wednesday described 2024 as a year of economic recovery and expressed hope for self-reliance in the new year, while acknowledging persistent security challenges caused by a surge in militant violence.
Pakistan narrowly avoided a sovereign debt default in 2023 after securing short-term external financing from the International Monetary Fund (IMF) under a $3 billion bailout program.
The agreement required Islamabad to implement stringent economic reforms, including subsidy cuts and utility price hikes, to stabilize its fragile economy. While macroeconomic indicators have since improved, many Pakistanis continue to grapple with the lingering effects of years of financial turmoil and the burden of reforms.
The government also managed to secure another IMF loan of $7 billion last year in September, saying it was important to get the money to consolidate the economic gains.
“2024 was a remarkable year for Pakistan, as we marched from default to development, overcoming economic challenges with resilience and determination,” Sharif wrote on X, formerly Twitter. “We made difficult but necessary decisions that rescued our economy from collapse, restored macroeconomic stability, controlled fiscal deficits, and strengthened our reserves. As a result, inflation has come down to single digits, and the prospects for economic growth have been revived.”
“We step into 2025 with renewed determination to achieve economic self-reliance and chart a brighter, more prosperous future for our nation,” he added.
Sharif’s remarks also addressed the security situation, highlighting Pakistan’s armed forces’ efforts to counter a renewed wave of militant violence.
“Amidst other challenges, Pakistan also faced a renewed surge in terrorism this year,” he said, reaffirming the military’s commitment to ensuring peace.
He credited the nation’s unwavering support for its forces in their fight against militants who, he maintained, “stand in stark opposition to the very idea of Pakistan.”
The prime minister also highlighted the launch of “Uraan Pakistan,” or “Fly Pakistan,” which is a homegrown five-year, export-oriented economic transformation plan unveiled by his administration a day earlier, which he described as a result of his government’s vision to build on recent stability and achieve sustained growth.
Pakistan PM vows to work for ‘economic self-reliance’ in 2025 amid security challenges
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Pakistan PM vows to work for ‘economic self-reliance’ in 2025 amid security challenges
- Shehbaz Sharif calls 2024 ‘a remarkable year of Pakistan’ in which it ‘marched from default to development’
- He acknowledges the renewed threat of militant violence while praising the military’s efforts to counter it
IMF warns against policy slippage amid weak recovery as it clears $1.2 billion for Pakistan
- Pakistan rebuilt reserves, cut its deficit and slowed inflation sharply over the past one year
- Fund says climate shocks, energy debt, stalled reforms threaten stability despite recent gains
ISLAMABAD: Pakistan’s economic recovery remains fragile despite a year of painful stabilization measures that helped pull the country back from the brink of default, the International Monetary Fund (IMF) warned on Thursday, after it approved a fresh $1.2 billion disbursement under its ongoing loan program.
The approval covers the second review of Pakistan’s Extended Fund Facility (EFF) and the first review of its climate-focused Resilience and Sustainability Facility (RSF), bringing total disbursements since last year to about $3.3 billion.
Pakistan entered the IMF program in September 2024 after years of weak revenues, soaring fiscal deficits, import controls, currency depletion and repeated climate shocks left the economy close to external default. A smaller stopgap arrangement earlier that year helped avert immediate default, but the current 37-month program was designed to restore macroeconomic stability through strict monetary tightening, currency adjustments, subsidy rationalization and aggressive revenue measures.
The IMF’s new review shows that Pakistan has delivered significant gains since then. Growth recovered to 3 percent last year after shrinking the year before. Inflation fell from over 23 percent to low single digits before rising again after this year’s floods. The current account posted its first surplus in 14 years, helped by stronger remittances and a sharp reduction in imports. And the government delivered a primary budget surplus of 1.3 percent of GDP, a key program requirement. Foreign exchange reserves, which had dropped dangerously low in 2023, rose from US$9.4 billion to US$14.5 billion by June.
“Pakistan’s reform implementation under the EFF arrangement has helped preserve macroeconomic stability in the face of several recent shocks,” IMF Deputy Managing Director Nigel Clarke said in a statement after the Board meeting.
But he warned that Islamabad must “maintain prudent policies” and accelerate reforms needed for private-sector-led and sustainable growth.
The Fund noted that the 2025 monsoon floods, affecting nearly seven million people, damaging housing, livestock and key crops, and displacing more than four million, have set back the recovery. The IMF now expects GDP growth in FY26 to be slightly lower and forecasts inflation to rise to 8–10 percent in the coming months as food prices adjust.
The review warns Pakistan against relaxing monetary or fiscal discipline prematurely. It urges the State Bank to keep policy “appropriately tight,” allow exchange-rate flexibility and improve communication. Islamabad must also continue raising revenues, broadening the tax base and protecting social spending, the Fund said.
Despite the progress, Pakistan’s structural weaknesses remain severe.
Power-sector circular debt stands at about $5.7 billion, and gas-sector arrears have climbed to $11.3 billion despite tariff adjustments. Reform of state-owned enterprises has slowed, including delays in privatizing loss-making electricity distributors and Pakistan International Airlines. Key governance and anti-corruption reforms have also been pushed back.
The IMF welcomed Pakistan’s expansion of its flagship Benazir Income Support Program, which raises cash transfers for low-income families and expands coverage, saying social protection is essential as climate shocks intensify. But it warned that high public debt, about 72 percent of GDP, thin external buffers and climate exposure leave the country vulnerable if reform momentum weakens.
The Fund said Pakistan’s challenge now is to convert short-term stabilization into sustained recovery after years of economic volatility, with its ability to maintain discipline, rather than the size of external financing alone, determining the durability of its gains.
