IMF Projects Rising Inflation in Pakistan
- Chalani Himasha
- 9 minutes ago
- 2 min read
Himasha Dissanayake, JadeTimes Staff
H. Dissanayake is a Jadetimes news reporter covering Asia
Image Source: MM News
ISLAMABAD — The International Monetary Fund (IMF) projects rising inflation in Pakistan, signaling renewed economic pressures for the country in the coming months. The IMF’s latest forecast suggests that inflation could climb from current levels of around 4.5 percent to 6.3 percent, and potentially reach 8.9 percent by June 2026, according to its official economic outlook report.
The multilateral lender also released updated estimates for key macroeconomic indicators, forecasting Pakistan’s GDP growth at approximately 3.2 percent for the current fiscal year. While this expansion points to moderate economic momentum, it remains constrained by ongoing structural challenges and external pressures. Unemployment is expected to ease only modestly, declining from about 8 percent to 7.5 percent.
On fiscal performance, the IMF projects a slight improvement in Pakistan’s tax-to-GDP ratio — rising to an estimated 16.3 percent in FY2026 from 15.9 percent in FY2025. The fiscal deficit is also anticipated to narrow, although public debt levels are expected to remain elevated at around 69.6 percent of GDP.
The IMF’s report underscores the dual challenge facing Pakistan’s policymakers: managing rising prices and inflationary expectations while sustaining economic growth and fiscal stability. The projections come amid broader concerns about global economic volatility and domestic supply constraints.
In addition to the inflation outlook, Pakistan recently received a $1.2 billion disbursement under its Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF), following IMF Executive Board approval. This funding aims to support ongoing reform efforts and strengthen macroeconomic buffers.
Economic analysts highlight that while inflation has moderated from previous highs, risks of future price pressures remain, particularly due to food and transport cost volatility and lingering external imbalances. Maintaining prudent fiscal and monetary policies will be critical for Pakistan as it navigates these economic challenges.
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