IMF sees Pakistan’s reserves rising to $17.7b by 2026

ISLAMABAD: The International Monetary Fund (IMF) has projected that Pakistan’s foreign exchange reserves will increase to $17.7 billion by the end of the next financial year (2025-26), reflecting growing economic stability amid continued reforms.

In its latest country report, the IMF estimated that Pakistan’s reserves would reach $13.9 billion by June 2025, before rising further to $17.7 billion a year later, assuming ongoing fiscal and structural reforms remain on track.

The report noted that Pakistan’s economy is recovering but remains fragile. GDP growth for the current fiscal year (2024-25) is expected to be 2.6 per cent — slightly below the government’s target — while growth is forecast to pick up to 3.6 per cent in the following year.

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Similarly, the IMF noted that after a year of soaring prices, inflation is expected to average 5.1 per cent in the current year but could edge up to 7.7 per cent in 2025-26 due to adjustments in energy prices and other reforms. Last year, average inflation had hit 23.4 per cent.

On employment, the IMF sees a modest improvement. The unemployment rate is projected to decline from 8 per cent this year to 7.5 per cent next year.

The IMF report also highlights the federal government’s commitment to timely adjustment of electricity and gas tariffs.

Authorities have assured the IMF that no provincial subsidies will be granted, and that all price revisions, including monthly and quarterly adjustments, will be enforced promptly.

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To address the country’s chronic circular debt in the energy sector, the federal government plans to borrow Rs1.25 trillion from banks to clear outstanding liabilities by the end of the current year.

The IMF warned that Pakistan’s economic outlook hinges on the government’s ability to stick to its reform commitments and maintain political and financial discipline.