The International Monetary Fund’s recent statement acknowledging Pakistan’s progress under its ongoing programme has been received with cautious optimism. The Fund noted improvements such as a primary fiscal surplus, moderation in inflation, and the first current account surplus in more than a decade. These developments, while significant, must be understood in context. For a country that has repeatedly faced the specter of sovereign default, even modest stabilisation is no small achievement. Yet the applause must remain measured, for the underlying challenges are far from resolved.
Pakistan’s fiscal discipline has indeed improved, with the primary surplus reflecting a degree of restraint in public spending. The current account balance, aided by import compression, higher remittances, and debt rollovers, has temporarily eased external pressures. These steps have reassured creditors and helped restore some confidence in the economy. However, the sustainability of these gains remains in question. Revenue mobilisation continues to lag, and reliance on episodic measures such as super taxes cannot substitute for comprehensive reform. Durable fiscal health requires broadening the tax base and strengthening institutional capacity, not short-term fixes.
Equally concerning is the slow progress on structural reforms. The IMF’s Governance and Corruption Diagnostic underscores that macroeconomic stability cannot endure without credible institutions. Slippages on reform benchmarks highlight the gap between stabilisation and sustainable growth. Without decisive action on governance, energy sector restructuring, and productivity enhancement, fiscal gains risk being temporary.
The social cost of stabilisation has also become starkly visible. Official poverty estimates reveal that nearly 70 million Pakistanis now live below the monthly poverty line of Rs8,484, marking an 11-year high in poverty incidence. The rate has climbed to almost 29 percent, up from 22 percent in 2019. This deterioration is compounded by rising inequality, with the income distribution index reaching its highest level in nearly three decades. Inflation and economic slowdown have eroded real incomes, leaving households struggling to meet basic needs.
The labour market reflects similar strain. Unemployment has risen to 7.1 percent, pointing not only to cyclical weakness but also to structural rigidities in job creation. For millions of families, stabilisation has not translated into relief. Instead, the adjustment burden has fallen disproportionately on lower- and middle-income groups, raising questions about the sustainability of reform without a parallel strategy for growth, employment, and social protection.
The government’s emphasis on stabilisation as a substitute for reform risks deepening this disconnect. Fiscal consolidation and external rebalancing may satisfy creditors and rating agencies, but they do little to address the lived reality of households. Without a comprehensive plan that couples macroeconomic discipline with inclusive growth, stabilisation will remain hollow.
Pakistan’s economic journey demands more than applause for short-term gains. It requires a commitment to structural reform, institutional credibility, and social protection. Stabilisation is a necessary step, but it is not the destination. The true measure of success lies in whether economic discipline can be transformed into sustainable prosperity for all citizens.
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