Pakistan begins planning for permanent exit from IMF after current bailout

Pakistan has initiated discussions on developing a long-term strategy to exit the International Monetary Fund (IMF) permanently after the conclusion of the $7 billion bailout programme in September 2027, The Express Tribune reported, citing official sources.

A recent high-level meeting reviewed whether Pakistan can sustain macroeconomic stability without IMF support once the current programme expires. The deliberations focused on strengthening foreign exchange buffers, expanding exports, and reducing recurring external financing pressures that have pushed the country into repeated IMF arrangements.

Sources said Prime Minister Shehbaz Sharif has directed the Planning Commission to convert the Uraan Pakistan framework into a results-based strategy to reduce long-term dependence on the IMF.

An internal assessment by the Planning Commission cautions that without urgent reforms, Pakistan risks entering another IMF programme. The Commission has projected that as the economy shifts from stabilisation to growth, the current account deficit could widen to below 2% of GDP, translating into more than $10 billion annually. This would require additional external financing of about $4 billion in 2027-28, $5.5 billion in 2028-29, and $3 billion in 2029-30.

The Planning Commission has proposed a three-phase reform roadmap. The first phase, running until 2027, focuses on fiscal management, energy sector reforms, governance, human capital development, and export alignment. The second phase, covering 2029–32, prioritises investment-led growth through industrialisation, export expansion, technology adoption, and agricultural modernisation. The third phase envisages a transition toward a technology-driven economy.

Planning Minister Ahsan Iqbal said sustaining independence from the IMF would require a sharp increase in exports. “If we want the current IMF programme to be the last one, exports must reach $63 billion by 2029; otherwise, an external financing gap will re-emerge,” he said.

The Planning Commission estimates that Pakistan could manage external financing needs exceeding $12 billion during 2028–30 if reforms are implemented promptly. The projected gap is expected to be met through an additional $4 billion in exports, $4 billion in remittances, $3 billion in new foreign direct investment, and savings from agriculture import substitution.

Officials said the Planning Commission’s assessment also recommends converting around $14 billion in short-term bilateral loans into long-term financing to ease repayment pressures. The Ministry of Finance did not respond to queries on whether it supports the proposed restructuring of bilateral debt.

Discussions on long-term economic sustainability gained momentum following recent remarks by the State Bank of Pakistan and the Special Investment Facilitation Council questioning the effectiveness of existing growth models and Pakistan’s continued reliance on external creditors.

The assessment also highlights structural weaknesses, including declining public and private investment, low productivity growth, weak export performance, and governance gaps. Pakistan’s investment rate remains near 14% of GDP, well below the 20% level seen as necessary for sustained growth. Exports have expanded only 4.1 times since 2000, compared with a 26-fold increase in Vietnam over the past two decades.

The Planning Commission has also flagged high tax rates, low human development indicators, rising unemployment, and widening regional disparities as constraints on growth, calling for governance and tax reforms to support investment, exports, and macroeconomic stability.