Pakistan’s hybrid regime is eager to project that the hardest part of economic stabilization is now behind them. It seeks to signal that the path to growth is within reach, contingent only on receiving a clean bill of health from the IMF which would help unlock foreign direct investment (FDI) from international partners. However, nothing could be further from the truth. The real challenge lies ahead: meaningful structural reforms, which are essential for sustainable growth, remain untouched. The IMF must not waver in its resolve, as this moment requires steadfast accountability to prevent Pakistan from relapsing, followed by an inevitable crisis.
The unprecedented hardships that Pakistanis have endured over the past four years —the historic rise in cost of living, loss of purchasing power, and erosion of asset values —highlight the stakes. The struggle for economic stability has imposed real, painful consequences on the average citizen and the business community. Any retreat into short-termism now would only set the stage for another eventual crisis, deeper and more devastating than the last. The IMF must therefore stay firm, setting clear expectations that Pakistan must enact overdue reforms, and that failure to do so would come at a high cost. But the IMF cannot effect change alone; citizens and businesses must take a stand and pressure the government to avoid the cycle of dependency, superficial growth, and deferred reform that has come to characterize Pakistan’s economic story.
The structural deficiencies in Pakistan’s economy are not recent phenomena but have roots in decades of mismanagement, elite capture, and a political culture averse to accountability. While the hybrid setup currently ruling Pakistan wields unprecedented stability—with the military’s backing, and a lack of credible opposition—it lacks the broad popular mandate necessary to motivate substantial reform. To win over the population, it may be tempted to revert to populist policies such as lowering fuel prices and electricity tariffs, reducing interest rates to spur industrial activity, and other relief measures that, while superficially appealing, may reignite economic imbalances and delay the necessary adjustments. The hybrid regime has every reason to exploit this path to revive its electoral appeal, particularly after controversial elections and the jailing of its primary political rival. This precarious balance calls for an external counterforce. The IMF must remain unwavering in its demands, holding Pakistan accountable for meaningful reform, while a grassroots coalition of citizens and businesses reinforces these demands from within the country.
To escape this repetitive cycle of dependence on external support, Pakistan must address its chronic structural weaknesses. These reforms—outlined but not yet implemented—include creating a fair and broad-based tax structure, reducing redundant governmental functions, promoting provincial fiscal autonomy, privatizing loss-making public enterprises, and developing a resilient energy sector. The measures may sound ambitious, but they are essential for economic self-reliance. Without a reimagined tax framework that taps into traditionally untaxed sectors such as real estate and agriculture, Pakistan’s fiscal deficit will only continue to grow. Without the privatization of loss-making enterprises, the public sector will remain a drag on resources that should be allocated to critical areas such as health, nutrition, education, and infrastructure. Without an efficient, deregulated economy, the barriers to private investment and productivity will persist, locking Pakistan into cycles of artificially inflated, unsustainable growth.
Moreover, Pakistan’s history with the IMF is marked by half-measures, deferrals, and missed benchmarks. Every engagement thus far has faltered in the face of elite resistance and the government’s tendency to seek waivers that water down reform objectives. This time, however, the IMF cannot afford to be lenient. A waiver on structural benchmarks now would only serve to legitimize further deferral of reforms and reinforce the status quo’s control over Pakistan’s economic trajectory. A strong message must be sent: no more band-aid solutions, no more half-hearted reforms, and no more short-sighted appeasements. Only genuine reform will earn IMF support. The need for strong and stable partnerships with international lenders is unquestionable, but these should be built on sustainable growth rather than the continuation of dependency.
Critical to this transformation is the emergence of a non-partisan coalition of private citizens and businesses willing to champion and sustain the call for reform. This coalition must transcend political allegiances and embrace a shared vision of a stable, economically sovereign Pakistan. The business community and civil society have an opportunity to assert themselves, setting aside immediate gains for the larger goal of economic durability. Only by doing so can they prevent a repeat of the suffering that Pakistan has experienced in recent years. For those in the business sector, enduring a period of slowed growth and limited consumption may go against the grain, yet it is a necessary trade-off for long-term economic stability. For ordinary citizens, accepting higher energy and fuel costs in the short run could protect them from the devastating inflationary pressures that a return to reckless economic policies would entail.
This path will not be easy. With inflation beginning to subside, foreign exchange reserves recovering, and interest rates stabilizing, it may be tempting for Pakistan’s elite to point to these early signs of recovery as evidence that the worst is behind them. But such arguments obscure the reality: these improvements are the result of painful, but temporary, IMF-backed measures. Without deeper reforms, Pakistan will inevitably find itself in the same situation once again.
Furthermore, the recent signs of international commodity price stabilization, support from bilateral partners, and rising hopes of de-escalation of global conflicts – both in Ukraine and the Middle East – provide a fleeting window of opportunity. These exogenous factors have given Pakistan breathing room, but they cannot be relied upon indefinitely. They should instead be viewed as enabling conditions that allow Pakistan to focus on long-term adjustments rather than leaning on IMF support as a crutch. A coalition of citizens and businesses that holds the government accountable can help ensure that Pakistan uses this opportunity to build a sustainable economy.
If Pakistan is to break free from its addiction to external support, it must abandon the illusion of easy growth and commit to an economy built on resilience, responsibility, and reform. Citizens, the business community, and the IMF must refuse to settle for anything less. The establishment, having historically undercut political governments, now stands in support of the ruling coalition. Bilateral partners have shown flexibility, and the political front is the most stable it has been in years. This rare alignment of forces offers Pakistan’s leaders the stability needed to implement reforms, and it is time for them to deliver.
The task ahead is formidable but not impossible. The IMF must hold Pakistan’s leadership accountable, refusing to allow the shortcuts that have led to one crisis after another. Meanwhile, private citizens, businesses, intellectuals, and industries must join hands to demand the reform necessary to put the economy on a sustainable path. Together, they must resist the temptation of artificially stimulated recovery and choose the path of real, long-term prosperity. In doing so, they will not only protect Pakistan’s future but also spare the next generation from repeating the economic pain of the past. This time, the IMF must not blink—and neither should the people of Pakistan.
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