Global Watch | Can Diplomacy Be A Substitute For Economic Mismanagement In Pakistan?

Pakistan’s diplomatic influence is growing, but whether it can translate that into economic strength without deeper political and institutional reforms remains the key question.

Over the past two years, Pakistan has acquired considerable diplomatic visibility.

It has inserted itself as an intermediary in the ongoing conflict involving the United States, Israel and Iran while initiating a series of new strategic arrangements like the Strategic Mutual Defence Agreement with Saudi Arabia in September 2025 and a joint security pact with the Kingdom along with Turkey.

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Such high-profile engagements not only strengthened Islamabad’s image as an important security actor in the Muslim world but also gave its leadership, both Asim Munir, the Army Chief and de facto ruler, and Prime Minister Shehbaz Sharif, the means of power consolidation.

But this external projection tells only part of the story, as behind this diplomatic activity lies an economy that remains dependent on external support and vulnerable to recurring fiscal pressures.

Pakistan has spent much of the past decade moving between stabilisation programmes, debt negotiations and efforts to secure external financing. The May 2026 review by the International Monetary Fund (IMF) projected Pakistan’s real GDP growth at 3.6 per cent for FY2026, while general government debt, excluding IMF obligations, was projected at 67.5 per cent of GDP. These figures indicate an economy that has gained some stability without resolving its deeper structural problems.

This gap between Pakistan’s international projection and domestic capacity has become increasingly significant due to the ever-expanding........

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