PAKISTAN has reached a staff-level agreement with the IMF after completing the fourth review under its programme. Implementation of the Extended Fund Facility is on track, with progress on macroeconomic stability. The challenge is to translate the gains into sustained growth. Political and administrative disruptions that can derail this difficult transition must be avoided. The fiscal deficit has been contained at 2.6 per cent of GDP. The primary surplus has strengthened, supported by provincial cash surpluses and exceptional grants to the federal budget. Revenue targets have been met, though raising petroleum levies amid rising global prices adds to inflationary pressure. The external current account has been broadly balanced, largely because of stronger-than-expected workers’ remittances, despite declining merchandise exports.

Sovereign credit ratings have improved, though remaining below 2006-07 levels. Access to global capital markets for long-term financing stands restored, and diversification into instruments like Panda bonds has begun. Foreign portfolio inflows have recovered, but FDI remains disappointing. Talks with the US Treasury on a proposed 10-year Exchange Stabilisation Facility continue, while tariff reduction discussions with the US Trade Representative remain inconclusive. Foreign exchange reserves accumulated by purchasing dollars from the intermarket rather than borrowing now cover three months of imports, up from a trough of $4.3 billion in FY2023, helping stabilise the exchange rate and strengthen the balance of payments. External public debt has declined to 25pc of GDP; the share of short-term debt has fallen from 24 to 16pc, partly after a Saudi deposit was converted into a three-year facility.

Yet ordinary citizens see little improvement. Poverty, joblessness, poor public services, unfair taxation,........

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