New Delhi, March 24 (NationPress) The ongoing discussion regarding another IMF funding arrangement has sparked significant debate within Pakistan, which has sought assistance from the multilateral lending institution a staggering 24 times for bailout packages aimed at addressing its macroeconomic challenges.

According to an article published in the Karachi-based Business Recorder, Pakistan's economy exhibits a troubling trend of growth in a "stop-start" manner. While IMF programs provide temporary stabilization, they fail to foster sustainable growth, leading to subsequent declines.

Even with IMF assistance, Pakistan's gross financing needs remain alarmingly high, and the substantial interest payments—representing a large portion of the federal budget—significantly restrict fiscal space. This situation hampers social and development spending while heightening vulnerability to macroeconomic shocks. The article emphasizes that although key indicators may improve during periods of stabilization, the overall resilience of the economy does not strengthen.

Several vulnerabilities continue to plague Pakistan's economy. Notably, the gains achieved in critical sectors like agriculture have been undone by recent floods. The IMF projects a slight deficit in the current account due to the adverse effects of the floods. While remittances remain robust, providing a vital external buffer, soaring imports driven by tariff adjustments and climatic shocks present severe risks, as noted in the article.

In addition to economic fragility, the risks posed by climate change continue to escalate. The recent flooding has inflicted more agricultural damage than anticipated, and if these impacts extend to the industrial and services sectors, inflation could rise, government revenues could decline, and governmental spending could face additional pressures. Furthermore, factors such as growing social unrest, geopolitical tensions, and global inflation may worsen vulnerabilities and heighten the risk of entering another crisis cycle, the article observed.

While IMF stabilization programs have primarily focused on rectifying demand-side imbalances, they have inadequately addressed supply-side constraints. The article points out that without implementing necessary reforms to tackle fundamental issues, these stabilization efforts leave the economy exposed to future crises.

Pakistan's export base remains limited due to stagnant production levels. Despite the devaluation of the rupee, exports have consistently hovered around 9% to 10% of GDP, a figure considerably lower than competitors like Bangladesh and Vietnam. This situation highlights that core barriers to growth include low productivity, a shortage of human capital, and structural inefficiencies. There is an urgent requirement for targeted policies that boost production in export-driven manufacturing and services while addressing structural challenges, enhancing human capital, and broadening the export base.

The human capital deficit in Pakistan remains a pressing issue despite efforts toward macroeconomic stabilization. The country lags behind peer nations such as Vietnam and Bangladesh in terms of health, education outcomes, and female labor force participation. Evidence from the HIES 2024-25 and LFS 2024-25 indicates that during fiscal tightening, households tend to reduce spending on healthcare and education, which directly undermines long-term productivity, the article lamented.