In early 2026, Pakistan’s economic strategy, particularly its interaction with the International Monetary Fund (IMF), drew significant national attention after Deputy Prime Minister Ishaq Dar characterized IMF programs as “anti-growth.” His remarks at the Pakistan Policy Dialogue exemplify a broader discussion regarding whether IMF-led stabilization efforts facilitate or impede Pakistan’s genuine economic development.
What Dar Actually Said?
Dar contended that traditional GDP metrics may be deceptive. He and others contend that economic growth must surpass population growth to be considered genuine progress. With Pakistan’s population expanding approximately 2.5 to 2.6% annually, a GDP growth rate below this range would not lead to an improvement in living standards.
He stated that IMF programs are generally perceived as limiting economic growth due to their focus on short-term fiscal discipline at the expense of long-term employment generation and investment.
However, Dar also recognized Pakistan’s capacity for increased growth through enhanced policy stability, expansion of exports, and the development of strategic alliances.
Latest Growth Numbers:
Contrary to simple “anti‑growth” claims, international forecasts suggest more balanced outcomes:
- The World Bank has recently forecasted Pakistan’s GDP growth at approximately 3% for FY2026, with the potential to increase to around 3.4% in FY2027.
- Earlier IMF projections anticipated approximately 3.6% growth for 2026, accompanied by a modest decrease in unemployment and managed inflation, although pressures persist.
These figures indicate that Pakistan’s economy is expanding at a rate exceeding its population growth in certain projections, challenging the notion that IMF programs hinder economic development. However, they also underscore that the pace of growth remains insufficient to significantly alleviate poverty or generate substantial employment opportunities.
This highlights the necessity for more comprehensive reforms beyond mere stabilization.
IMF Programs: Stability First, Growth Next?
IMF arrangements generally concentrate on:
- Minimizing fiscal deficits
- A restrictive monetary policy aimed at controlling inflation
- Enhancement of foreign exchange reserves
These policies have enabled Pakistan to avert balance-of-payments crises and maintain manageable financing costs, yet they frequently involve elevated interest rates and constrained public expenditure, which can hinder investment and employment growth in the short term.
Recent IMF assessments indicate ongoing collaboration, with Pakistan securing disbursements under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) agreements totaling more than $1.2 billion in new support as of late 2025.
Why Pakistan Still Needs External Support?
Despite debates, Pakistan still depends on IMF and other partners for financial stability:
- IMF conditions frequently link disbursements to fiscal objectives and reform commitments, including enhancements in taxation and governance.
- Currency reserves, external debt servicing, and fiscal sustainability enhance when IMF policies are stable even in the context of modest growth.
This underscores a fundamental principle: stability provides the groundwork for growth but does not serve as a catalyst for expansion independently.
Broader Economic Strategy Beyond IMF:
Dar and other officials have advocated strategies to enhance IMF stabilization efforts:
- Export expansion & remittances: Strategies to increase exports of products and services, along with enhancing remittances, are fundamental to reducing the external financing deficit.
- Diversification of partnerships: Engagement with Gulf countries, the United States, Europe, and Central Asia aims to foster investment and enhance trade.
- Structural reforms: The privatization of unprofitable state enterprises, the implementation of digital governance, and reforms within the energy sector are intended to enhance competitiveness.
These broader initiatives are essential for achieving sustainable growth and decreasing reliance on debt and short-term IMF conditions.
What This Means for People:
For the majority of Pakistanis, the debate is not merely theoretical; it has tangible implications:
- Jobs: Economic growth that merely keeps pace with population expansion is insufficient to decrease unemployment.
- Living expenses: Inflation, energy costs, and taxation levels influence household financial planning.
- Business investment: Elevated interest rates may constrain corporate growth and employment opportunities.
Sustainable growth that alleviates poverty and enhances incomes necessitates both macroeconomic discipline and comprehensive long-term structural reforms.
Growth Requires More Than Stability
IMF programs establish stability and fiscal discipline; however, they do not, in isolation, promote robust economic growth. Recent projections indicate that Pakistan has the potential to surpass population growth rates, particularly if reforms enhance productivity and trade. Authentic achievement will result from the integration of:
- Robust fiscal frameworks
- Investment-encouraging policies
- Trade and Export Strategies
- Structural reforms that facilitate private sector expansion
This equitable pathway provides a more defined route to employment, improved living standards, and sustained long-term resilience.
Conclusion:
IMF programs provide essential stability and fiscal discipline, but alone they cannot drive strong, inclusive growth in Pakistan. Combining macroeconomic stability with structural reforms, trade expansion, and investment-friendly policies is key to creating jobs and improving living standards. Sustainable economic progress depends on a balanced approach that fosters both stability and long-term growth.
Frequently Asked Questions:
How is Pakistan reducing dependence on IMF loans?
The government is working to expand exports, increase remittances, and strengthen service sector revenue. Structural reforms, such as privatization of state enterprises and energy sector improvements, also aim to reduce reliance on external borrowing and create sustainable growth opportunities.
How do IMF programs affect investment in Pakistan?
IMF programs often involve higher interest rates and tighter public spending to stabilize the economy. While this strengthens fiscal health, it can discourage private sector investment and slow industrial and infrastructure development in the short term.
What is meant by “real growth” according to Ishaq Dar?
Dar defines real growth as any GDP expansion that exceeds population growth, roughly 2.5–2.6% annually. Growth below this level only maintains the status quo and does not improve living standards, emphasizing the need for policies that generate jobs and income.
