Economic Stabilisation Is Not Economic Success

Pakistan’s latest understanding with the International Monetary Fund, which could unlock approximately $1.21 billion following approval by the IMF’s Executive Board, has understandably been welcomed in official circles. With the country continuing to face external financing pressures, maintaining the confidence of international lenders is important. No one familiar with Pakistan’s economic circumstances would dispute that.

But there is something about the way we measure economic achievement in Pakistan that deserves serious reflection. Each time an IMF review is completed or another tranche comes within reach, it is presented almost as a milestone in national economic progress. 

Negotiations conclude, reassuring statements follow, and attention moves towards the next review. Meanwhile, a more difficult question remains largely unanswered: what has actually changed in the economy?

We seem to have become accustomed to celebrating the management of financial difficulties rather than examining why those difficulties continue to return.

An IMF programme can provide stability, improve confidence and allow a government time to put its finances in order. These are necessary steps, particularly for an economy that has repeatedly experienced pressure on its foreign exchange reserves. But borrowing cannot become a substitute for economic development. The purpose of securing financial breathing space must surely be to build an economy that will eventually require less of it.

This is where the performance of the present 

government deserves closer examination.

According to the Pakistan Bureau of Statistics, the economy recorded provisional growth of 3.7 percent during FY2025–26, compared with a revised 3.18 percent in the preceding year. The IMF’s October assessment places growth slightly lower, at 3.6 percent. There has been a recovery, and it would be unreasonable to deny it. The question is whether this represents sufficient progress for a country with a population exceeding 240 million and a growing number of young people looking for work.

Growth at this level may help the economy regain some lost ground, but it is unlikely, on its own, to produce the employment opportunities and improvements in living standards that Pakistan urgently needs. We should be careful not to confuse recovery from difficult circumstances with the beginning of sustained prosperity.

The distinction becomes clearer when we move away from official statistics and look at the household budget.

Consumer price inflation stood at 10.3 percent in September 2026, according to the Pakistan Bureau of Statistics, compared with 11.1 percent in August. The reduction in the annual rate is welcome, but it does not mean that prices have fallen. They are still rising, only at a somewhat slower pace. For families already struggling with accumulated increases in food, electricity, transportation, education and healthcare costs, that distinction matters enormously.

A salaried person does not assess the economy by examining the latest IMF statement. He looks at what remains of his income after meeting his family’s expenses. A shopkeeper looks at his sales and operating costs. A manufacturer considers whether another production line will be commercially viable. These are the realities 

against which economic performance must eventually be judged.

It would be simplistic to hold any one government responsible for every increase in prices. International energy markets, weather conditions, supply disruptions and exchange-rate movements all influence domestic costs. Nevertheless, governments are elected to manage difficult circumstances, not merely to explain them.

The employment challenge is equally serious. The Labour Force Survey for 2024–25 reported unemployment at 7.1 percent. Beyond those officially counted as unemployed are many others working fewer hours than they would like, earning inadequate incomes or accepting employment that makes little use of their qualifications.

For a country with Pakistan’s demographic profile, creating productive employment is not 

simply an economic objective. It is a national necessity.

Yet employment cannot expand substantially unless businesses are willing to invest.

Anyone who has managed a business understands that investment decisions are rarely made on the strength of official announcements. Before committing capital, an entrepreneur considers electricity costs, taxation, financing, machinery, labour, regulations and, perhaps most importantly, whether the rules of business are likely to remain reasonably consistent.

The government has spoken repeatedly about attracting investment and improving the business environment. There is nothing wrong with these objectives. But investment conferences, expressions of interest and announcements of prospective projects should not be mistaken for investment actually taking  place.

The real evidence is found in factories established, machinery installed, businesses expanded and people employed.

Pakistan’s investment base remains too limited for the kind of economic expansion the country requires. Unless productive investment rises consistently, we will continue to struggle with inadequate employment opportunities, a narrow export base and modest economic growth.

Energy costs are another matter that cannot be ignored.

For an industrialist, electricity is not merely a utility bill. It directly affects the cost of production and the ability to compete. When energy becomes expensive or unpredictable, the consequences are felt throughout the economy. Businesses delay expansion, production becomes less competitive and opportunities to increase exports are weakened.

The IMF’s latest programme review again emphasises energy-sector efficiency, tariff reforms and measures to prevent further accumulation of circular debt. These are necessary reforms, but their repeated appearance in economic programmes should concern us.

Why do the same fundamental problems continue to require attention year after year?

A financially sustainable energy sector is essential, but sustainability cannot depend indefinitely on recovering higher charges from consumers and businesses. It must also come from reducing inefficiencies, improving governance and addressing the underlying costs of the system.

The approach to taxation deserves similar scrutiny.

Pakistan unquestionably needs a stronger revenue base. A country cannot provide  adequate education, healthcare, infrastructure or public services without collecting taxes. But there is a difference between improving tax collection and creating an environment in which the economy itself expands.

The tendency to place additional burdens on existing taxpayers, while progress in broadening the tax base remains insufficient, creates an obvious difficulty. Businesses need to remain profitable if they are to invest, employ people and contribute more revenue over time.

Tax policy should encourage economic activity, not merely extract additional revenue from those already within the system.

Agriculture provides another example of how much remains to be done.

Pakistan has fertile land, an extensive irrigation network and generations of agricultural experience. Yet farmers continue to struggle with input costs, water availability, productivity,  storage and access to markets. At the same time, consumers complain about the prices of essential food items.

The farmer says he cannot produce cheaply enough, while the consumer says he cannot afford to buy at prevailing prices. Both have legitimate concerns, and both are affected by inefficiencies that exist between production and the marketplace.

Agriculture should be approached as a major economic opportunity. Better irrigation, mechanisation, storage, modern farming methods and investment in food processing can improve productivity, reduce waste and create additional export earnings. These are not ambitions beyond Pakistan’s capacity. They require consistent policies and a willingness to address longstanding structural problems.

Government expenditure must also form part of this discussion.

Fiscal discipline should not mean that the public is continually asked to contribute more while inefficiencies within the public sector receive less attention. Loss-making state-owned enterprises, unnecessary administrative costs and poorly targeted expenditures place burdens on an economy already operating under considerable pressure.

The government has discussed privatisation and public-sector reform, but the public is entitled to judge these efforts by completed reforms and measurable financial improvements rather than intentions alone.

It is important to be fair in assessing the present administration. Pakistan’s economic difficulties did not begin in March 2024. They have accumulated over decades, through successive governments and periods of both domestic and international uncertainty. Some recent improvements in macroeconomic indicators are  real and should be acknowledged.

But there comes a point when inherited difficulties can no longer provide a sufficient explanation for the pace of progress.

After more than two years in office, the government must be judged by what it has managed to change. Has it made investment easier? Has it reduced the structural costs facing industry? Has it broadened the tax base without repeatedly burdening the same taxpayers? Has it created the conditions for stronger exports and productive employment?

These questions should not be uncomfortable in a functioning economy. They are precisely the questions that responsible economic debate ought to address.

Nor should criticism of economic management be confused with criticism of the state. Pakistan’s institutions, economic interests and long-term stability are larger than any government. Holding an administration accountable for its policies is entirely consistent with wanting the country to succeed.

The IMF has acknowledged that Pakistan’s programme remains broadly on track. That is encouraging. But meeting programme commitments and transforming an economy are not the same achievement.

Our economic discussions have for too long revolved around fiscal deficits, foreign exchange reserves, loan disbursements and the next round of negotiations. These matters are important, but they are instruments of economic management, not its ultimate purpose.

The purpose is to create a country in which businesses find it worthwhile to invest, workers can earn reasonable incomes, farmers can produce profitably and families can look towards the future with greater financial security.

Pakistan possesses the resources, entrepreneurial talent, geographical advantages and human potential to achieve considerably more than it is currently delivering. What it requires is not another series of ambitious announcements, but consistent economic policies backed by measurable results.

The latest IMF understanding may provide the government with additional financial breathing space. It should use that opportunity to demonstrate tangible progress in investment, industrial competitiveness, exports, employment and the cost of living.

The government should also be prepared to answer a straightforward question: after more than two years, is Pakistan merely managing its economic difficulties more effectively, or has it begun to resolve the weaknesses that repeatedly bring those difficulties back?

There is a considerable difference between the two.

Financial stabilisation may prevent an economy from deteriorating further. Economic success requires it to move forward.

And that is what Pakistan, and its people, have every right to expect.