Archive · 5 Jan 2026
Pakistan's Economic Crisis Deepens Under IMF Policies
Pakistan is facing a serious economic crisis.
The government has been following strict money-saving rules set by the IMF, which have made life harder for regular people.
Instead of cutting unnecessary government spending, the government has increased taxes and reduced subsidies, putting a heavy burden on ordinary citizens.
This has led to many businesses closing, high unemployment, and nearly half of the population living in poverty.
The government has also been spending a lot on things like new cars and trips for officials, while not doing enough to create jobs or improve education.
Experts warn that if things don't change, Pakistan will continue to struggle with low growth, high unemployment, and social unrest.
Pakistan's investment-to-GDP ratio is stuck at 13.1%, far below the regional average of over 30%.
The government has imposed austerity measures under IMF watch, increasing taxes and cutting subsidies instead of reducing government spending.
Discretionary expenditure has skyrocketed, with public funds used for patronage and political loyalties.
The country is experiencing permanent economic 'scarring', with businesses shutting down, unemployment surging, and nearly half of the population below the poverty line.
The government's focus on large domestic business groups to revive confidence has been met with skepticism by economists.
- Who
- Pakistan's government, IMF, and ordinary Pakistanis
- What
- Economic crisis due to IMF policies and government spending
- When
- Since 2022
- Where
- Pakistan, with a focus on Karachi and Islamabad
- Why
- Due to IMF-imposed austerity measures, government spending profligacy, and lack of policy reforms
- Investment-to-GDP Ratio
- 13.1%
- Regional Average Investment-to-GDP Ratio
- More than 30%
- SIFC Launch Year
- 2022
- SIFC's Current Status
- Failed to attract major investments
- Government's New Focus
- Supporting large domestic business groups
- Fiscal Adjustment
- 5.5% of GDP
- New Taxation Measures
- Over PKR 50.4 trillion since 2022-23
- Development Spending
- Increased from PKR 1.9 trillion to PKR 3.1 trillion
- Unemployment Rate
- 7% (official), 22% (estimated)
- Youth Unemployment
- 2.2 million entering labor force annually
Sources
Pakistan’s Investment Crisis Worsens, SIFC Struggles To Attract Investors Despite Big Promises
Pakistan reeling under mounting unemployment
IMF’s orthodoxy set to consign Pakistan to a low-growth trap: Report
