International Finance | Pakistan

ISLAMABAD: Pakistan’s economic recovery has been stronger than expected, yet the country has failed to seize an opportunity to put its recovery on a sustainable path due to the absence of bold and long-lasting reforms, according to the Washington-based Institute of International Finance (IIF). In a special report, the IIF noted that while Pakistan has successfully rebuilt its economic buffers and secured financing, the gains will likely prove short-lived without comprehensive structural reforms, particularly in tax broadening, privatisation, and the resolution of circular debt. The report emphasised that Pakistan has made little headway in these critical areas, particularly privatisation and energy-sector restructuring, with circular debt still unresolved. The IIF warned that these unresolved issues pose a significant risk to Pakistan’s economic outlook for FY26. Notably, inflation has decreased significantly, allowing the State Bank of Pakistan (SBP) to cut its policy rate to 11pc since the easing cycle bega...