IMF Lowers Pakistan’s Growth Outlook

The International Monetary Fund (IMF) on Tuesday in its latest World Economic Outlook Update projected Pakistan’s GDP growth at 3.6 percent for FY25, lower than the government’s 4.2 percent target. The estimate remains unchanged from earlier forecasts. Pakistan briefed diplomats from key partner countries on its economic performance and reform agenda. Diplomats raised concerns about rising external debt servicing costs, heavy reliance on commercial borrowing, and the fiscal sustainability of energy reforms. Minister of State for Finance Bilal Azhar Kayani and Power Minister Awais Leghari led the briefing. Officials claimed GDP grew by 2.7 percent in FY25 and per capita income rose 10 percent to $1,824, based on outdated population data. They also mentioned a primary surplus of 3.1 percent of GDP but did not clarify the coverage period. Inflation fell to 4.5 percent, the lowest in nine years, while the policy rate was cut from 22 percent to 11 percent. The debt-to-GDP ratio declined to 69 percent. However, officials acknowledged the central bank purchased $7.3 billion from the local market between July and April to stabilize the rupee. In the energy sector, diplomats were told the Rs. 2.4 trillion circular debt is being addressed through Rs. 1.25 trillion in new commercial loans, to be repaid via a Rs. 3.24/unit electricity surcharge. Diplomats questioned the sustainability of this plan. Leghari admitted structural issues like high tariffs and poor pricing had made power unaffordable. He said reforms focus on tariff rationalization, loss reduction, and grid efficiency. Three power distribution companies are being restructured for privatization by early 2026. The government is seeking $2–3 billion in investment in transmission upgrades, renewable energy, and efficiency improvements.