Pakistan’s economy in 2024 continued to falter under significant pressure, reflected by its soaring inflation, reduced foreign reserves, and an unsustainable fiscal deficit. The government struggled to secure confidence from domestic and international stakeholders, with the Pakistani rupee depreciating massively against the US dollar, increasing the cost of exports. The nation also witnessed energy shortages and increasing prices for fuel, with the general populace growing more and more frustrated with the government’s refusal to properly act against the nation’s crippling economy.
Political instability also contributed to the country’s economic crisis with the current government tasked with implementing meaning reforms but constantly failing. The people of Pakistan also believe that the nation’s general election was heavily tampered with as the country’s “elite” are heavily against and threatened by former PM Imran khan. These several factors are only the tip of the iceberg, pushing away any possible foreign investment into the nation.
IMF Bailouts and Conditionality
The IMF remained an important player in Pakistan’s economy in 2024. After securing a $3 billion bailout package in the middle of the year, Pakistan faced strict conditions, including subsidy cuts and tax hikes. These measures, led to severe public backlash as the cost of living increased for ordinary citizens. Food prices skyrocketed, and the general public found themselves squeezed financially.
The government also struggled with meeting IMF performance benchmarks, leading to delays in funding. This situation highlights the deep structural issues in Pakistan’s economy, especially its dependency on external financing and their own inability to generate sustainable revenue.
Regional Comparisons and the Way Forward
While Pakistan faltered, neighbouring countries like India and Bangladesh reflected economic stability and growth. India’s manufacturing and technology sectors helped it reduce global economic challenges, while Bangladesh’s export-based economy, particularly in textiles, thrived. This difference reflected the importance of investment in human capital, and political stability.
For Pakistan to recover, experts emphasize the need for immediate reforms in tax collection, energy infrastructure, and industrial policy. Increasing exports through trade diversification and investing in renewable energy could offer solutions, however, without political stability and a clear vision, such reforms remain challenging.