Published by: S&B Advisors and Consultants (Private) Limited
Author: Ms. Saima Morkas
Date: July 5, 2025
Over the past few months, the Government of Pakistan has repeatedly made bold claims about economic stabilization. Officials cite improving macroeconomic indicators, a narrowing current account deficit, renewed engagement with the International Monetary Fund (IMF), and rising foreign exchange reserves as signs of recovery. But are these claims grounded in reality — or merely a short-lived mirage?
For many experts, the answer lies somewhere in between. While some economic indicators have improved on paper, the lived experience of millions of Pakistanis tells a different story.
The Government’s Narrative
According to the official stance, Pakistan is on a path to economic stability. Inflation is said to be under control, the Pakistani rupee has shown signs of recovery, and international partners are once again showing confidence in the country’s financial future. The recent IMF tranche has brought some relief, providing a cushion for the State Bank of Pakistan and giving the government breathing room to manage fiscal imbalances.
The Underlying Concerns
Despite this optimistic narrative, economic experts continue to voice serious concerns:
Dr. Hafeez Pasha, renowned economist and former finance minister, remarked:
“The government’s focus on meeting IMF targets without addressing core structural reforms is worrying. Inflation may ease temporarily, but income inequality and unemployment continue to rise.”
Dr. Kaiser Bengali, senior economist, commented:
“The economic fundamentals are still weak. The tax system is regressive, exports remain stagnant, and public sector enterprises are bleeding finances. These issues can’t be masked by short-term IMF funding.”
Dr. Ashfaque H. Khan, former advisor to the Ministry of Finance, emphasized:
“The government is overplaying marginal improvements. Our debt servicing costs are skyrocketing, and industrial activity is at its lowest in years. We’re running out of time for real reforms.”
Short-Term Relief, Long-Term Risks
The current stabilization measures may offer temporary relief — especially when backed by IMF support — but they do not address the underlying structural issues. Economic stability cannot be achieved through patchwork fixes. It requires long-term reforms, political will, and consistent policy implementation.
Experts caution that reliance on external funding and short-term bailouts creates a cycle of dependency. Without industrial growth, export expansion, and fiscal discipline, the economy risks falling back into crisis with every global or domestic shock.
What Needs to Change?
- To ensure real and lasting stability, Pakistan must:
- Reform its tax system and broaden the tax base
- Invest in energy infrastructure and eliminate circular debt
- Promote exports through innovation and value-added products
- Support small and medium enterprises (SMEs)
- Build investor confidence through legal and regulatory reforms
The Bottom Line
While the government may have managed to temporarily stabilize the economic surface, deep cracks remain underneath.
Experts warn that unless these are addressed through meaningful reforms and inclusive growth strategies, the current sense of recovery may prove to be short-lived.
“The economy needs surgery, not band-aids,” as Dr. Pasha puts it.
The real question isn’t whether the economy looks better today — it’s whether it will still be standing tomorrow.