Islamabad, December 19, 2025: The International Monetary Fund (IMF) has expressed serious concerns that powerful vested interest groups in Pakistan could undermine the effective implementation of agreed program policies, posing risks to fiscal stability and long-term economic growth.
In its latest assessment, the IMF cautioned that policy slippages and mounting pressures on the government to grant incentives or exemptions to influential sectors could weaken reform momentum. The Fund noted that political resistance or hesitation in delivering key structural reforms—combined with weak institutional capacity—may derail program objectives, reduce the chances of durable economic adjustment, and threaten the narrow path toward debt sustainability.
The IMF identified these risks as “high,” warning that weaker fiscal discipline could compromise the quality and durability of fiscal adjustment while exposing Pakistan to heightened debt sustainability risks. Any deviation from a market-driven exchange rate policy could also put pressure on foreign exchange reserves, trigger currency shortages, and undermine export competitiveness.
The report further highlighted that delays in completing the structural reform agenda would reduce medium-term growth prospects, entrench overreliance on the public sector, and preserve the dominance of a large informal economy. Such outcomes, the IMF warned, could leave significant contingent liabilities unaddressed and contribute to subdued economic growth.
To mitigate these risks, the IMF urged Pakistan to implement strong and consistent policies while strengthening institutions, including anti-corruption bodies, as the foundation for sustainable and inclusive growth. It advised the government to resist pressures that could weaken fiscal discipline, preserve fiscal sustainability, and allow exchange rate flexibility to absorb economic shocks.
The Fund also emphasized building external buffers, improving external competitiveness, and advancing reforms to enhance the private sector business environment. Additionally, it called for scaling up targeted social assistance programs to foster more inclusive growth and protect vulnerable segments of society during the reform process.