The International Monetary Fund (IMF) has warned that Pakistan may face significant price increases in the coming months. The IMF report projects inflation rise from 4.5 percent to 6.3 percent, with the potential to reach 8.9 percent by June 2026.
The IMF also released updated economic forecasts, expecting Pakistan’s growth rate to reach 3.2 percent in the current fiscal year. Unemployment is predicted to fall slightly, from 8 percent to 7.5 percent.
On fiscal matters, the tax-to-GDP ratio is projected to rise to 16.3 percent in FY2026, compared with 15.9 percent in FY2025. The fiscal deficit is expected to narrow to 4 percent from last year’s 5.4 percent. However, Pakistan’s debt burden is projected to remain high at 69.6 percent of GDP.
The IMF’s report highlights the dual challenge Pakistan faces: controlling rising prices while maintaining economic growth and fiscal stability. The new projections indicate that policy adjustments may be required to mitigate the effects of inflation. The IMF projects inflation rise as a key concern that could affect household budgets and business costs.
Earlier, the IMF Executive Board approved $1.2 billion in financial assistance for Pakistan. The funds will come under the 37-month Extended Fund Facility (EFF) and the climate-focused Resilience and Sustainability Facility (RSF). This decision follows Pakistan’s timely implementation of economic and energy reforms, which helped secure the release.
The IMF noted that the funds would be transferred immediately, offering some support to the country’s economic measures. Despite this, the IMF report also projects inflation rise as an ongoing challenge that requires careful monitoring by policymakers.
Officials emphasized that Pakistan must balance fiscal discipline with economic growth strategies. Managing inflation, along with structural reforms, will remain a priority in the coming months to ensure sustainable development.
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