The World Bank has advised Pakistan to adhere to the IMF loan program and continue critical reforms to sustain economic stability.
In its latest assessment, the Bank emphasized that debt rollover from friendly nations and refinancing from international institutions are essential to meet Pakistan’s financial obligations and maintain stability.
The report warned that the fiscal deficit is projected to remain high at 5.4% of GDP in the current fiscal year and 5.2% next year, while the debt-to-GDP ratio is expected to hover around 75.9% this year and 75% next year.
Current account, fiscal outlook
The current account deficit is expected to remain contained at 0.3% this year and 0.6% next year, the report said, reflecting cautious import controls and moderate export recovery. However, tight fiscal policies are likely to limit economic growth, even as the government focuses on stabilization measures.
The World Bank stressed the importance of a market-based exchange rate and a more active interbank market to ensure transparency and confidence in the financial system.
Floods amplify economic challenges
According to Bolormaa Amgaabazar, the newly appointed World Bank country director for Pakistan, the recent floods have had “significant human and economic costs,” derailing development prospects and intensifying pressure on economic stability.
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“The immediate and long-term effects of the floods will continue to weigh on economic growth,” she said, adding that Pakistan must accelerate employment opportunities and strengthen social protection mechanisms to support vulnerable communities.
Reform agenda and structural recommendations
The World Bank outlined a series of policy recommendations aimed at long-term sustainability and resilience:
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Broaden the scope of direct taxes to enhance revenue collection.
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Harmonize the general sales tax (GST) across sectors for uniformity.
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Improve the business and regulatory environment to attract investment.
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Promote privatization to reduce excessive state control in the economy.
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Implement the National Tariff Policy announced in the federal budget.
The Bank also highlighted that 25–30% additional tax duties in Pakistan significantly raise business costs, making industries less competitive. It added that 40% of firms face difficulties obtaining credit, a major constraint to private sector growth.
Need for sustainable and inclusive growth
Bolormaa Amgaabazar emphasized that sustainable development and economic resilience require “comprehensive measures and policy consistency.” She reaffirmed the World Bank’s commitment to supporting Pakistan in expanding its reform agenda, fostering job creation, and ensuring social safety nets for the poor.
Despite global uncertainty and ongoing risks from climate-induced disasters, the World Bank maintained that continued reform and fiscal discipline remain the key to stabilizing Pakistan’s economy and unlocking its growth potential.
