Politics and the IMF

Pakistan's back in the spotlight. This time, a top official says the country's almost ready to cut its reliance on the IMF. It's a gutsy thing to say, and everyone's got an opinion. The IMF isn't new to Pakistan — far from it. For years, its loans have helped the country dodge some ugly crises, but that help always comes with a price. Tough conditions follow every deal: spending cuts, reforms, political fallout. With prices still high and jobs hard to find, talk of breaking free from the IMF is bound to get people's attention.

Right now, Pakistan's tied to another IMF programme it signed up for in 2024. That deal pulled in billions, rebuilt the country's foreign reserves, and eased investor nerves. By the end of 2025, reserves hit around nine billion dollars, a huge jump from the scary lows of 2023.

Inflation's cooled off, too, dropping from over 25 per cent to the low double digits. The current account deficit is smaller now, partly because imports are down and people abroad keep sending money home. These are real steps forward, but let's not kid ourselves. Pakistan isn't ready to stand alone just yet.

Growth is still slothful. The latest forecasts say GDP will stay under 3 per cent next year, which just isn't enough to create jobs for all those young people pouring into the job market. Public debt is heavy, over 70 per cent of GDP.

The government's still making big payments on foreign loans, and that keeps the budget under pressure. So, when officials talk about ending IMF dependence soon, it sounds more like wishful thinking. Although exports may increase in sectors such as defence and manufacturing, it remains challenging for Pakistan to close the funding gap in the near future.

And let's not forget the politics. IMF deals always mean unpopular moves: higher energy bills, fewer subsidies, more taxes. No government wants to take the heat, but they've all done it to steer clear of default.

The current leaders face the same squeeze. They want to look strong and in control, but they have to follow IMF rules to keep the money coming. Mixed signals can create uncertainty for both individuals and markets.

Long term, it's no surprise Pakistan wants out of this cycle, but that's going to take more than quick fixes. The tax-to-GDP ratio is still one of the lowest in the region, so there's not enough cash for development or helping those who need it most. The energy sector keeps losing money, and state companies are bleeding millions. If Pakistan doesn't deal with these deep-rooted problems, progress will stay shaky.

If financial independence is the goal, some things need to change. Pakistan needs to widen the tax net, not just raise rates, but actually collect what's owed. It has to grow industries that can compete abroad and back value-added agriculture to help the trade balance.

Consistent investment in education and job skills will boost productivity and keep growth alive. And above all, the country needs political stability and policies that last. Investors tend to avoid situations characterised by uncertainty. These flaws required correction.

At the end of the day, moving away from the IMF isn't about slamming the door on outside help. It's about building an economy that doesn't need to lean on it so much. That's not going to happen overnight.

It takes hard work, patience and honesty from leaders. Big promises sound good for a moment, but real progress comes from reforms that last and institutions that get stronger. The real question is whether these good intentions finally turn into something permanent.