Pakistan

Pakistan’s central bank kept its benchmark interest rate unchanged at 10.5 percent, signaling a cautious pause as policymakers weigh easing inflation against fragile economic growth. The decision reflects a balancing act between stabilizing prices, supporting the currency, and maintaining investor confidence amid external financing pressures. While inflation has moderated from previous highs, authorities remain wary of volatility in food and energy costs, as well as global commodity fluctuations.

Internet access in Pakistan has expanded rapidly, with a recent survey indicating that nearly 70% of the population now has online connectivity. The surge reflects a combination of falling data costs, wider smartphone adoption, and continued investment in telecom infrastructure. Increased internet penetration is reshaping consumer behavior, accelerating digital payments, e-commerce, and online education, while also opening new avenues for businesses and policymakers. However, gaps persist between urban and rural regions, as well as in digital literacy.

Pakistan’s central bank has reduced its benchmark policy rate to 10.5%, signaling a strategic move to support economic growth while managing inflationary pressures. The decision reflects the bank’s assessment of moderating inflation, stable foreign reserves, and the need to stimulate investment and consumption. Analysts note that the rate cut could ease borrowing costs for businesses and households, potentially boosting credit demand and economic activity. However, it also requires careful monitoring to prevent inflationary resurgence.

Pakistan’s total debt crossed $286 billion in the fiscal year 2025, reflecting mounting fiscal pressures, high borrowing requirements, and persistent trade deficits. Analysts attribute the surge to a combination of external loans, domestic borrowing, and currency depreciation. Rising debt servicing obligations are intensifying macroeconomic challenges, including inflation and currency volatility. The government is under pressure to implement structural reforms, enhance revenue collection, and attract foreign investment to stabilize public finances.

Pakistan is set to undergo a crucial International Monetary Fund (IMF) loan review, with approximately USD 7 billion in financial assistance hanging in the balance. The review, aimed at evaluating Pakistan’s fiscal and structural reforms, will determine the continuation of IMF support under the existing Extended Fund Facility (EFF). Analysts emphasize that timely approval is critical for Pakistan to stabilize its foreign exchange reserves, manage external debt obligations, and sustain macroeconomic stability.

Pakistan is poised for a pivotal International Monetary Fund (IMF) review, with USD 7 billion (approximately Rs. 6.3 trillion) in funding contingent on meeting fiscal, monetary, and structural reform targets. The review will assess Pakistan’s progress on budgetary consolidation, foreign exchange stability, and macroeconomic reforms aimed at reducing fiscal deficits and promoting sustainable growth. IMF approval is crucial to unlocking tranche disbursements, supporting foreign reserves, and maintaining investor confidence.