IMF Exposes Pakistan’s Deepening Economic Crisis: Debt, Inflation and Slow Growth Raise Red Flags

IMF’s latest assessment reveals Pakistan’s worsening economic crisis driven by rising debt, weak investment, slow job growth and population pressure. Despite temporary stability and a fresh IMF installment, long-term recovery remains difficult for the struggling nation.

Post Published By: Karan Sharma

Updated : 10 December 2025, 6:03 PM IST

Pakistan's 24 IMF Bailouts: Why Its Economy Still Struggles (Image Source: Internet)

New Delhi: The economic situation in neighboring Pakistan has been dire for a long time. Rising debt, a depreciating currency, high inflation, and a significant decline in investment have brought its economy to a near standstill.

Pakistan is repeatedly attempting to stabilize its economy through borrowing, but unstable politics and weak policies are preventing sustainable recovery.

Meanwhile, the International Monetary Fund (IMF) has released its latest report, which makes serious observations about Pakistan's true economic situation.

IMF Approves $1.2 Billion Relief for Pakistan Amid Deepening Economic Crisis

The IMF's assessment indicates that while Pakistan has achieved some short-term stability, this improvement is superficial, and the real challenges remain unchanged.

Key Issues Raised by the IMF

• The IMF has clarified that Pakistan is still grappling with several serious economic problems.
• The country is burdened by a heavy debt load, which is continuously weighing down its economy.
• The investment climate is weak, deterring foreign investors from investing in new projects.
• Job growth is extremely slow, suggesting that economic difficulties may worsen in the coming years.

The report comes at a time when the IMF has released a new aid tranche of approximately $1.2 billion to Pakistan. This financial assistance may provide some temporary relief, but the fundamental problems remain unresolved.

IMF approves new $1.2 billion aid for Pakistan: What's the full story?

Why Is Economic Growth So Slow?

The IMF estimates that Pakistan's economic growth rate could reach 3.2% in 2025-26. This is slightly better than the 2.6% of the previous year, but the problem is that Pakistan's population is growing at a rate of approximately 2.55%.

This means that the country's economic growth is almost equal to its population growth—meaning there will be no significant improvement in people's income or living standards.

Per Capita Income and Inflation Challenges

Currently, Pakistan's per capita income is approximately $1,677, which indicates economic stagnation. Although inflation has decreased from 23.4% in 2023-24 to 4.5% in 2024-25, the IMF projects that it could rise again to 6.3% in 2025-26.

IMF Signs Staff-Level Agreement with Pakistan, Will Provide $1.2 Billion in Economic Assistance

Rapid population growth, limited resources, and persistent political instability are major obstacles to economic recovery. This is why Pakistan's economic turnaround appears extremely challenging.