Pakistan’s rebound masks deeper problems weighing on economy: Bloomberg

Pakistan’s stronger markets and external buffers have not removed deep economic risks, Bloomberg reported in a story published by Profit by Pakistan Today. Inflation stayed above the central bank’s target in October, after the State Bank lifted its policy rate by 50 basis points to 12% last week. The bank cited a weaker inflation outlook amid oil prices above $100 a barrel and rising wheat prices.

The government has pointed to foreign reserves of $21.5 billion and credit-rating improvements as signs of progress, while the IMF’s latest staff-level agreement could provide another $1.2 billion if approved. Yet former finance minister Miftah Ismail warned that high borrowing needs and reliance on external funding leave the economy exposed, with another IMF programme potentially needed after current arrangements end next year. Political unrest, militant violence, high energy costs and dependence on imported oil add to the pressures.

Pakistan has borrowed more than $4 billion from global markets this year and is seeking further ratings upgrades as it considers additional debt issuance. Bloomberg also reported that the rupee has held near 277 per dollar over the past year and the KSE-100 has gained more than 300% since 2023, with investors attributing much of the rise to the IMF programme. Economists cited in the report said lasting improvement depends on stronger exports, remittances, investment, productivity and fiscal reforms.