Pakistan's much-touted economic 'stabilisation' over the past four years has largely meant the economy stopped contracting — not that incomes rose, jobs were created, or public services improved, according to a new report by Colombo-based publication Asian News Post. The findings, published on 9 October 2026, offer a sharp critique of the economic strategy pursued under Prime Minister Shehbaz Sharif's government.

Stabilisation vs Prosperity: A Critical Distinction

The report draws a pointed distinction between economic stabilisation and genuine recovery. According to its findings, the Sharif government prioritised avoiding sovereign default through IMF-backed programmes, a strategy that ensured short-term fiscal order but at the cost of long-term investment and growth. The majority of public expenditure, the report argues, went toward maintaining the existing administrative and financial system rather than building future economic capacity.

'Most spending was consumed by routine operations, debt obligations, transfers, and subsidies, while very little was invested in infrastructure, human capital, or long-term development,' the publication noted. Many ordinary Pakistanis, it added, mistook the word 'stability' to mean that economic conditions had materially improved — a perception the data does not support.

Where Pakistan's Money Actually Went

Over the last four years, total public expenditure reached Rs 90 trillion. The breakdown reveals a structural imbalance: roughly 33% went to debt servicing, 28.2% was transferred to provinces under the NFC award, 9.1% was allocated to defence, 7.4% to pensions, 10% covered losses of state-owned enterprises, 3.4% was directed to energy subsidies, and 2.9% went to the Benazir Income Support Programme.

Critically, only around 4.6% was channelled through the Public Sector Development Programme (PSDP) — the government's primary mechanism for development spending. This is a strikingly small share for a country with a rapidly growing population that requires new schools, hospitals, roads, water systems, public transportation, and energy infrastructure.

Debt Surge Compounds the Crisis

Government debt has ballooned significantly over the period under review, rising from approximately Rs 47 trillion in 2022 to roughly Rs 83 trillion by 2026, according to the report. As borrowing surged, so did interest payments, which now consume ever-larger portions of government revenue — leaving fewer resources available for productive development spending.

The report also flags persistent losses at state-owned enterprises and a faulty taxation policy as factors compounding Pakistan's fiscal bind. This combination of high debt servicing costs and structurally weak revenue generation has, critics argue, trapped the economy in a cycle where stabilisation programmes repeatedly rescue it from default without addressing the underlying conditions that make default a recurring risk.

What This Means for Pakistan's Future

This comes amid growing concern among economists that successive stabilisation programmes were designed to keep Pakistan's economy afloat rather than to deliver prosperity. Notably, the pattern of IMF-backed austerity followed by fiscal slippage has repeated itself several times since the 1980s, raising questions about whether the current programme breaks that cycle.

With Pakistan's population growing and infrastructure needs compounding, the gap between what a stabilised economy promises and what it delivers for ordinary citizens is likely to remain a flashpoint — both politically and economically — in the years ahead.