By Farooq Awan
Pakistan’s reform-driven recovery is gaining global attention after successful IMF reviews and international rating upgrades by Fitch, S&P, and Moody’s. These moves signal renewed trust in the country’s economic management.
IMF Reviews Highlight Strong Government Policies
The Finance Division’s Monthly Economic Update & Outlook for October 2025 highlighted that completing IMF reviews under both the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) reflects strong government policies and commitment to structural reform.
Investor Risk Falls Sharply
Investor risk has fallen sharply. Pakistan’s sovereign risk dropped significantly, with the credit default swap (CDS) spread narrowing by 2,200 basis points over the last 15 months. This shows that careful fiscal management, stable external accounts, and disciplined monetary policies are boosting confidence.
Sustainable Finance Gains Momentum
Sustainable finance is getting a boost too. Fitch Ratings gave Pakistan’s Sustainable Financing Framework an “Excellent” alignment score, showing full compliance with international ESG (environmental, social, and governance) standards for green and social bonds. This, according to the Finance Division, will attract more global finance inflows.
Macro Indicators and Fiscal Discipline Improve
Macro indicators are improving steadily. The rupee is holding steady against the dollar, foreign exchange reserves have climbed to $19.9 billion, and inflation is staying in the 5–6 percent range despite flood-related supply shocks.
IMF success strengthens trust. “The successful IMF review reaffirmed confidence in Pakistan’s reform path and careful economic management,” the report said. It also supports discussions for future programs to maintain fiscal sustainability.
Economists say better ratings and IMF approval will lower borrowing costs and improve access to global capital markets. “With credibility up, debt rollover becomes easier, and foreign investment finds a safer entry point,” one analyst in Karachi told this reporter.
Fiscal discipline shows results. The Finance Division noted that broadening the tax base, improving spending efficiency, and coordinating monetary policy led to a fiscal surplus of Rs1.5 trillion in July–August FY2026, a sharp turnaround from last year’s deficit.
Focus on Growth and Future Reforms
Looking ahead, reforms will target growth areas. Officials said the next focus will be boosting competitiveness, diversifying exports, and expanding renewable energy and digital sectors. “The government is committed to turning macro stability into sustainable and inclusive growth,” the report added.
Policy Continuity Remains Key
Policy continuity is key. The Finance Division emphasized that keeping economic policies steady is essential to hold recent gains. “The IMF’s positive review and international rating upgrades show Pakistan’s reform progress and resilience amid global uncertainties,” it concluded.
Author Profile
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Farooq Awan is a meticulous finance correspondent focused on Pakistan’s growth engines.
His reporting, driven by State Bank data, details the services sector's resilience and 3% expansion as the primary force behind GDP recovery. Awan highlights the critical role of ICT and stable policy in driving this essential economic digital transformation.
