Pakistan Economy Stabilizes Under IMF Program but Poverty and Inequality Surge

IMF Backs Macroeconomic Stabilization Amid Social Strain​

New Delhi, February 24: Even as the International Monetary Fund has praised Pakistan for stabilizing its economy under its ongoing support program, new data shows that poverty and income inequality have sharply worsened, raising concerns about the social cost of recent reforms.

According to a report by Dawn, while key macroeconomic indicators such as the fiscal balance and the current account have improved, millions of citizens are facing increasing hardship. The divergence highlights a widening gap between economic stabilization on paper and the lived reality of households across the country.

Fiscal Discipline Improves but Structural Challenges Persist​

After a prolonged period marked by twin deficits, currency volatility, and declining foreign exchange reserves, even a modest primary surplus is being viewed as a sign of renewed fiscal discipline.

The improvement in the current account balance has eased some external pressures. However, analysts point out that the gains were largely driven by lower imports, higher remittances, and bilateral debt rollovers rather than a sustained rise in exports.

Revenue shortfalls continue to strain government finances. A recent super tax ruling by the Federal Constitutional Court has provided temporary relief, but economists argue that long term fiscal stability will depend on broadening the tax base rather than relying on one time measures.

Concerns also remain over the slow pace of structural reforms and other key targets under the IMF program. These reforms are seen as essential to convert short term stabilization into durable and sustainable economic growth.

The IMF’s Governance and Corruption Diagnostic further underscores that macroeconomic stability depends heavily on strong institutions and credible governance frameworks.

Poverty Rate Climbs to 11 Year High​

While stabilization efforts continue, new data has revealed a steep social cost.

Recent poverty estimates show that nearly 70 million Pakistanis are now living below the monthly poverty line of Rs 8,484, an amount that does not cover basic needs.

Planning Minister Ahsan Iqbal, while releasing official survey findings, said the poverty rate has climbed to almost 29 per cent, the highest level in 11 years. This marks a sharp rise from just under 22 per cent recorded in 2019.

Income Inequality and Unemployment Worsen​

Income inequality has also intensified. The inequality index has risen to 32.7, the highest level in nearly three decades, reflecting a sharp decline in real incomes and household consumption amid high inflation and economic slowdown.

The labour market has weakened as well, with unemployment increasing to 7.1 per cent.

Analysts caution that the burden of economic adjustment appears to have fallen disproportionately on lower and middle income groups.

Sustainability Hinges on Growth and Social Protection​

Without a parallel strategy that focuses on economic growth, job creation, and social protection, observers warn that the current stabilization may not be sustainable over the long term.

While macro indicators signal progress under the IMF program, the sharp rise in poverty, inequality, and unemployment suggests that Pakistan’s economic recovery remains uneven and socially fragile.