Islamabad:
The International Monetary Fund (IMF) on Tuesday projected Pakistan’s financial growth rate of 3.6% for the current financial year, under the government’s official target of 4.2%. The projection was released in the IMF’s latest World Economic Outlook update report that kept Pakistan’s growth forecast unchanged.
The government had set a higher growth target based on expected improvement in agriculture and industrial sectors. However, the World Bank recently estimated that poverty in Pakistan affects almost 45% of the population. Official data on poverty and unemployment is currently unavailable, although the Pakistan Bureau of Statistics (PBS) is said to update relevant studies. Due to outdated data, the preliminary GDP growth rate of 2.7% for FY2024-25 has been disputed by independent economists. PBS is planning to release conclusions of the latest agricultural count next month, which can address some of these queries.
On the same day, the federal government also informed foreign diplomats on recent economic development and sought support to increase foreign direct investments (FDI), which remains low. Diplomats raised concerns about rising debt costs, great dependence on expensive commercial loans, tax cutting measures and the sustainability of the power department’s plan to reduce circular debt through RS1.25 trillion in fresh domestic borrowing.
Prime Minister of Bilal Azhar Kayani and Minister of Power Sardar Awais Ahmad Khan Leghari led the briefing for diplomats from the US, UK, EU, Italy, Germany, Canada, Australia, Switzerland, Japan, Holland and Saudi Arabia. According to a press release from the Ministry of Finance, officials outlined reforms in taxation and the electricity sector. Kayani said Pakistan’s macroeconomic strategy had changed from stabilization to sustained reform. He noted that GDP growth was 2.7% in FY2024-25, and income per year. Inhabitants rose by 10% to $ 1,824. However, this was based on old and relatively low population estimates.
The Ministry of Finance claimed a primary profit of 3.1% in GDP, the highest in 20 years, although it did not manage in the press release whether this was for the whole year or only the first 11 months.
Inflation fell to 4.5%, a nine-year-old low, while the central bank’s political rate was halved from 22%to 11%. Debt-to-BNP ratio also reportedly fell to 69%, which indicates improved fiscal management.
Diplomats asked how the government was planning to reduce the high cost of external debt. Officials said the strategy had already ended with both the IMF and the World Bank. The Ministry of Finance said the external sector showed resilience and recorded a $ 2.1 billion profit, the first of 14 years and the highest in 22 years. This was supported by strong transfers, higher exports, rising FDI and stable foreign reserves of over $ 14.5 billion.
Officials claimed that this performance was achieved without much dependence on foreign borrowing. However, the central bank bought at least $ 7.3 billion from the local market between July and April, which kept the rupe artificially low. This amount exceeded the entire three-year size of the IMF-Bailout package.
Diplomats were also told that two credit rating agencies had recently given Pakistan -Positive reviews and Moody’s is expected to upgrade the country soon. S&P upgraded Pakistan to ‘B -Negative’ last week and advises further political and security stability for continued progress.
In the energy sector, LEGHARI said diplomats that significant milestones had been achieved, although questions remained over their long -term sustainability. He said that the circular debt, now around RS2.4 trillion, was treated under a plan agreed with the IMF.
The government has secured RS1.25 trillion in commercial loans to pay a large part of this debt. Repayment is financed through an RS3.24 per Electricity supplement fees that are ultimately worn by consumers. Diplomats questioned whether this approach was sustainable. Leghari recognized structural problems, such as high tariffs and ineffective pricing, which had made electricity unaffordable for households and industry. These questions had also created tax pressure.
In order to tackle them, the government has made broad -based reforms centered on customization, fiscal responsibility and operational improvement. Leghari said that progress had been made to stabilize circular debt in FY2025.
He also pointed out the need to modernize energy planning to explain seasonal demand changes, regional supply holes and the increasing role of distributed generation.
The distribution company’s performance was another important focus. Leghari said that infrastructure upgrades and strengthened governance were underway to reduce losses, with reforms implemented to ensure regional equity and institutional coordination.
He called on foreign governments and global investors to invest in the energy sector with reference to $ 2-3 billion in potential across web modernization, renewable energy, distribution efficiency and energy services. He also noted that the government is aiming to privatize electricity distribution companies, where three companies were restructured to privatization in early 2026.
Chairman FBR, Rashid Langrial, oriented diplomats on the FBR transformation plan, built on three pillars: people, process and technology. He claimed that real tax collection had increased by 46% due to improved compliance and enforcement.
He also said that the tax-to-BNP ratio rose to 10.24% in FY2025, up from 8.8% in FY2024.
However, Pakistan still missed his IMF revenue target with 0.3% of GDP despite the collection of record high taxes last year.
