New Delhi, Feb 22 (NationPress) Although the IMF loan has temporarily rescued Pakistan from a severe economic crisis, the combination of fragile growth and contentious internal politics indicates that maintaining this period of stability may be challenging in the medium term, as outlined in a recent article.

In September 2024, the IMF sanctioned a $7 billion Extended Fund Facility aimed at restoring macroeconomic stability and re-establishing policy credibility. To date, Pakistan has received around $3.3 billion under this program. An additional $3.7 billion is set for distribution in semi-annual installments until the end of 2027, contingent upon successful evaluations and ongoing adherence to IMF stipulations. This structure is designed to instill policy discipline, with IMF approval acting as a signal for partners in the Gulf region to provide further financial backing, as highlighted in an IntelliNews article.

In exchange, the authorities have pledged a significant shift towards orthodox macroeconomic management, which encompasses fiscal consolidation and stricter monetary policies.

However, this has led to subdued growth. In 2024, the real GDP increased by only 2.4 percent, with an estimated growth of approximately 3.5 percent in 2025. With a population growth rate nearing 2 percent annually, improvements in per-capita income have been minimal, providing little enhancement to living standards, as noted in the article.

This weak economic backdrop complicates the government's reform initiatives. Opposition to IMF-endorsed policies, frequently labeled as anti-growth by critics, has been mounting. Proposed hikes in electricity tariffs, aimed at addressing structural issues in the energy sector, could add roughly 1 percent to inflation in the short term, potentially undermining public support for the program.

Furthermore, Pakistan's extensive history with the IMF offers little assurance. This marks its 24th program since 1958, more than any other nation. The pattern has often involved compliance during crises followed by policy deterioration once pressures subside, only for similar imbalances to resurface years later. While previous arrangements have typically restored short-term stability, they have rarely led to sustainable structural reform or a significant enhancement in long-term growth prospects, the article notes.

Consequently, some political figures have already advocated for an early exit from the current program. However, such calls are unlikely to gain substantial momentum at this time, particularly as Pakistan's external financing requirements remain significant and with the next general election not scheduled until 2029, the government maintains some political leeway to uphold policy discipline.

Thus, the program is set to continue until the end of 2027, and while IMF oversight is in place, compliance with orthodox fiscal and monetary policies is likely. However, once conditionality concludes, the temptation to relax policies or postpone politically sensitive reforms could reemerge, especially if growth continues to disappoint as the election cycle approaches, the article concludes.