Answer Structure for This Topic

1. Background of the economic crisis
2. Key indicators (current)
3. IMF program and reforms
4. Structural challenges
5. Positive developments
6. Conclusion

Background

• Severe balance-of-payments crisis in 2023 — driven by excessive external borrowing, decades of governance issues, low productivity, rising fuel/commodity prices (Russia-Ukraine war impact), 2022 floods (~$30 billion in damages), and political instability
• Government (PDM coalition) initiated a stabilization program: $3 billion IMF loan (July 2023), followed by a second $7 billion IMF bailout (September 2024)

Key Indicators (as of 2026 — verify closer to exam)

• Fiscal deficit: fell to a 22-year low of 2.6% of GDP in FY2025-26
• GDP growth: ~3.1% (2025); Pakistan's economy is now confirmed to have grown 3.7% in FY2025-26 (July 2025–June 2026) — the fastest pace in four years, though still short of the government's original target
• Inflation (CPI): fell to multi-decade lows near ~3% in early/mid-2026, but reversed sharply in August 2026 — CPI inflation jumped to 11.1–11.15% YoY (Pakistan Bureau of Statistics), more than tripling within a year and returning to double digits after the brief relief. Do not cite a flat "~3%" figure for all of 2026 without noting this reversal
• GDP (nominal): $452.1 billion (2026); GDP rank ~40th globally (nominal)
• Population below poverty line: 44.7% (16.4% in extreme poverty) — still a major structural concern despite headline stabilization
• Government debt: 83.6% of GDP (2026) — still very high
• Credit ratings: gradually improving but still low (S&P: CCC+; Moody's: Caa2 outlook positive; Fitch: B−)
• Pakistan marked 79 years of independence on 14 August 2026