Economic stability has been achieved, and the country will not be deterred from implementing the reform agenda agreed with the International Monetary Fund (IMF) – a claim that has repeatedly been pledged by the country’s cabinet members.

The pros and cons of economic stability are stark in Pakistan: pros include strengthening foreign exchange reserves, rising remittances, plummeting inflation and halving of the discount rate in one year (21 percent in June 2024 to 11 percent in June 2025).

The cons negate these gains with (i) reserves entirely debt based as roll-overs are estimated at 16 billion dollars while reserves on 11 July 2025 reached a high of 14.525 billion dollars – a high achieved by the State Bank of Pakistan reportedly picking up 8 billion dollars from the open market that led to a severe dollar supply shortage in the open market leading to a fall in the rupee value in spite of the current account surplus; (ii) the rise in remittance inflows leading to the current account surplus is are not expected to end the boom bust trade cycle — “economic volatility has only increased over time, with a tight correlation between Pakistan’s boom-bust economic outcomes and its economic policies” was noted by the IMF in its September 2024 documents; (iii) declining inflation which has been unable to arrest the rise in poverty levels (44.2 percent at present as per the World Bank), and (iv) reduction in the discount rate that has been unable to lift the large scale manufacturing sector out of its negativity (with the latest data placing it at negative 1.52 percent).

This leads one to carefully review IMF’s first review documents dated May 2025 where it argues that external and domestic risks may “quickly eviscerate Pakistan’s hard won economic........

© Business Recorder