Pakistan’s heavy reliance on International Monetary Fund (IMF) support highlights the scale of its economic vulnerabilities and the lack of sustained reforms, according to a new report cited by IANS on Saturday.
The analysis stressed that IMF loans will always provide cash for short-term survival rather than long-term recovery, thus making the country continue to be in a borrowing cycle that does not tackle the structure of the economy.
Inconsistencies in meeting financial targets have raised doubts about the credibility of Pakistan’s external sector statistics. The report noted that this has prompted the IMF to demand “corrective measures and a clear communication strategy to restore investor confidence,” according to Khaama Press, an online news service covering Afghanistan.
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The IMF recently launched a formal review of Pakistan’s $7 billion Extended Financing Facility (EFF) and $1.1 billion Resilience and Sustainability Facility (RSF), covering performance through June 2025. While Islamabad met benchmarks in the power sector, revenue collection lagged by nearly 1.2 trillion Pakistani rupees, almost 1 per cent of GDP.
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The report also flagged an $11 billion discrepancy in trade data over the past two fiscal years. “Import figures reported by Pakistan Revenue Automation Limited (PRAL) were $5.1 billion lower than those from Pakistan Single Window (PSW) in FY2023-24, and the gap widened further to $5.7 billion in FY2024-25,” it said.
Authorities, including the Pakistan Bureau of Statistics, have hesitated to revise historical data due to concerns over growth and export numbers, but the IMF insists transparency is crucial.
Short-term borrowing masks long-term challenges
The report highlighted that successive governments have “repeatedly avoided long-term reforms, instead turning to short-term external borrowing to manage immediate pressures.” As a result, Pakistan’s balance of payments crisis has become chronic, with IMF bailouts evolving “into routine lifelines rather than extraordinary interventions.”
Current IMF-related obligations already exceed $7 billion, while officially reported external debt accounts for 35.1 per cent of GDP. The rising debt burden poses severe risks to fiscal consolidation, with the debt-servicing ratio near 30 per cent of export earnings–the same level that pushed Pakistan into default in 1999.
“With exports stagnant at just 8 per cent of GDP and imports exceeding 22 per cent, the country faces a structural foreign exchange deficit that cannot be bridged without further borrowing, locking it into a cycle of dependency,” the report said.
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Limited reform progress despite international support
Governance reforms have seen limited success, revenue targets continue to be missed despite repeated IMF programmes, and structural reform implementation remains inconsistent. The report pointed out that “The World Bank’s $20 billion ten-year programme announced in January 2025 aims to support energy, education, and infrastructure, but its scale is still insufficient compared to Pakistan’s annual $30 billion debt-servicing requirements.”
The report concluded that for Pakistan to escape the cycle of crisis and bailouts, the arrangement between the IMF and Islamabad must be recalibrated.
