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IMF Forecasts 6.5% GDP Growth Upswing for Pakistan with Reform Uptake

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  //politics-government.news-articles.net/content/ .. wth-upswing-for-pakistan-with-reform-uptake.html
  Published in Politics and Government on Thursday, November 20th 2025 at 7:21 GMT by Channel NewsAsia Singapore

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IMF Forecasts a 6.5 % GDP Upswing for Pakistan if Corruption and Governance Reforms Take Hold

In a recent review published by the International Monetary Fund (IMF) and reported by Channel News Asia, officials outlined a potentially transformative scenario for Pakistan’s economy. The IMF now projects that the country could achieve a 6.5 % increase in gross domestic product (GDP) growth for 2025 and 2026—roughly double the upper range of the IMF’s own baseline forecast—provided that Pakistan tackles entrenched corruption, improves governance, and implements a robust set of fiscal and structural reforms.

The Current Economic Landscape

Pakistan’s economic fundamentals have been under pressure for several years. Inflation sits above 25 %, while the fiscal deficit remains stubbornly high—approximately 7 % of GDP, largely driven by subsidised energy, food and transport. The country’s public debt has climbed to around 80 % of GDP, a level that the IMF regards as “unsustainable” in the long term.

In addition to macro‑financial challenges, political instability has continued to impede investment. The country’s most recent general elections, held in 2022, saw a fragmented parliament and a caretaker government that struggled to set a coherent economic agenda. This backdrop has made it difficult for the government to carry through the reforms needed to stabilise the economy.

The IMF’s Conditional Support

The IMF’s latest economic outlook, released in March 2024, is delivered under a $5.5 billion Extended Fund Facility (EFF). The facility is designed to support Pakistan’s ongoing economic recovery program, but it comes with a set of conditions that emphasize the importance of good governance.

Key policy measures identified by the IMF include:

1. Fiscal Consolidation – Sharpening the public sector wage bill, restructuring subsidies, and enhancing tax collection mechanisms.
2. Anti‑Corruption Measures – Strengthening institutions such as the National Accountability Bureau and creating independent audit mechanisms for public spending.
3. Governance Reforms – Improving transparency and accountability in the public sector, streamlining procurement processes, and ensuring that public contracts are awarded on merit rather than political patronage.
4. Structural Reforms – Diversifying the economy beyond agriculture and textiles, investing in infrastructure, and creating an environment conducive to private investment.

The IMF stresses that these reforms are not only “necessary” for Pakistan’s short‑term fiscal health but also “critical” for unlocking higher growth prospects in the medium to long term.

A 6.5 % Growth Upside

If Pakistan successfully implements the reforms above, the IMF projects that GDP growth could reach 6.5 % in 2025 and 2026. This figure is derived from a scenario where the country reduces its fiscal deficit, improves tax revenues, and restores investor confidence. In contrast, the IMF’s baseline projection—assuming the current trajectory of policy implementation—places growth at 2–3 % for the same period.

The article notes that the 6.5 % figure reflects a “significant” upside that could accelerate Pakistan’s recovery and bring the country closer to its long‑term development goals. It also underscores that the upside is contingent on political will and the ability of successive governments to adhere to the IMF’s conditionality.

Political Context and Implementation Challenges

The article discusses the political dimension of the reform agenda. Pakistan is scheduled to hold its next general elections in 2025, which could bring new leadership or prolong the caretaker period. A stable government is viewed as essential for passing the necessary legislation and for maintaining the momentum required for reforms.

In addition, the IMF review points out that corruption remains a pervasive obstacle. According to the IMF, corruption costs Pakistan a significant percentage of its budget and dampens foreign direct investment (FDI). Thus, tackling corruption is not just a moral imperative but also a pragmatic economic necessity.

Additional Resources and Context

The Channel News Asia piece links to several sources that deepen the context:

• IMF Official Statement – Provides the detailed conditions and policy recommendations.
• Pakistan’s Ministry of Finance – Offers data on fiscal indicators and reform roadmaps.
• World Bank Country Report on Pakistan – Supplies supplementary analysis on governance and corruption risks.
• Reuters Coverage of Pakistan’s Upcoming Elections – Offers insight into the political dynamics that may influence reform implementation.

These links help readers gauge the nuances of the IMF’s expectations and understand how Pakistan’s domestic politics intersect with international financial support.

Takeaway

The IMF’s 6.5 % growth forecast signals a stark choice for Pakistan: either maintain the status quo, with modest growth and persistent economic instability, or adopt a rigorous reform agenda that tackles corruption, improves governance, and consolidates public finances. The latter path could double the country’s growth trajectory over the next two years, but it requires decisive political action, a commitment to transparency, and sustained international cooperation.

For investors, policymakers, and citizens alike, the IMF’s warning—and opportunity—serves as a call to confront long‑standing governance challenges head‑on if Pakistan hopes to realise its full economic potential.