In Washington, the International Monetary Fund praises fiscal discipline, applauds a primary surplus, and highlights the country’s first current account surplus in 14 years. In Islamabad, policymakers speak of stabilisation, confidence, and reform momentum. The narrative is tidy: Pakistan stepped back from the brink and is now on firmer ground.

But outside official briefings and donor statements, the reality is harsher. Poverty has climbed to 29 per cent, an 11-year high. Income inequality is at levels not seen in nearly three decades. Real household incomes have shrunk. Unemployment is at a 21-year peak. For millions of families, “stability” feels indistinguishable from suffocation.

This is not a contradiction. It is the central paradox of Pakistan’s economic moment.

The country has stabilised, but it has not healed.

There is no denying that macroeconomic repair was necessary. Pakistan was careening towards default not long ago. Foreign reserves were evaporating, the rupee was in free fall, and inflation was scorching households. The IMF programme imposed discipline where domestic politics had repeatedly failed. Subsidies were cut. Energy prices were raised. The currency was allowed to adjust. Monetary policy tightened.

But stabilisation is not the same as recovery. It is emergency care, not rehabilitation.

When subsidies vanish, and indirect taxes rise, the burden does not fall evenly. It lands hardest on those already stretched thin — lower-middle-income earners, daily wage workers, small traders. Inflation may be “contained” now, but the damage of the surge remains embedded in daily life. Food, electricity, fuel — essentials became luxuries. And wages did not keep pace.

The result is visible in the poverty numbers. Seventy million people are now officially below the poverty line. In rural areas, more than a third of the population struggles to meet basic needs. In Balochistan, nearly half. This is not cyclical discomfort; it is structural erosion.

Planning Minister Ahsan Iqbal has conceded that stabilisation policies contributed to the spike in poverty. He is not wrong. Fiscal consolidation and currency devaluation are blunt instruments. They restore balance sheets, but they squeeze households.

Yet blaming the IMF alone misses the larger truth. Pakistan’s vulnerability did not begin with this programme. It is the product of decades of avoidance.

For years, successive governments, civilian and otherwise, chose expediency over reform. Instead of broadening the tax base, they leaned on the already compliant. Instead of restructuring loss-making state enterprises, they subsidised inefficiency. Instead of investing consistently in export competitiveness, they relied on remittances and short-lived consumption booms.

Each cycle followed a predictable arc: stimulate growth through borrowing, enjoy a temporary surge, watch the current account balloon, then return to the IMF when financing dries up. Stabilise. Pause. Repeat.

The current account surplus being celebrated today is partly due to suppressed imports, as domestic demand has weakened. That is not export transformation; it is compression. It reflects caution and constraint more than competitiveness.

Meanwhile, the structural weaknesses remain stubborn. Pakistan exports less than many smaller economies. Manufacturing has not regained sustained momentum. Growth, when it appears, is often described as “jobless” — output expands without meaningful employment gains. A population of 240 million cannot build prosperity on eleven million overseas workers sending remittances home.

Political instability has made matters worse. Since 2018, Pakistan has lurched through power struggles, dissolutions, and polarising rhetoric. Policy continuity has been fragile. Investors do not commit long-term capital when the rules may change with the next confrontation.

Security challenges in provinces like Khyber Pakhtunkhwa and Balochistan add another layer of fragility, disrupting livelihoods and deterring private enterprise. Climate shocks, most notably the devastating floods of 2022, have compounded fiscal strain and deepened rural vulnerability.

All of this forms a web of constraint that no quarterly IMF review can untangle.

The IMF can insist on fiscal targets. It can demand transparency reforms. It can monitor performance benchmarks. What it cannot do is generate political consensus within Pakistan for big structural change. That responsibility rests squarely with the country’s leadership.

And here lies the uncomfortable question: is stabilisation being used as a bridge to transformation — or as an end in itself?

There is a risk that policymakers mistake improved macro indicators for genuine progress. A primary surplus and a steadier exchange rate are achievements, but they are not destiny. If households continue to experience declining real incomes, if inequality widens, if employment remains scarce, social frustration will simmer beneath the veneer of fiscal order.

Economic reform cannot succeed indefinitely without social legitimacy.

The window for meaningful change is narrow but real. Stabilisation has created breathing room. Default risk has receded. Inflation has cooled. This is precisely when governments must pivot from austerity to productivity — from emergency management to opportunity creation.

That means serious tax reform that broadens the base rather than squeezing the same segments repeatedly. It means reforming state-owned enterprises that drain public resources. It means investing in education and skills with measurable outcomes, not ceremonial announcements. It means creating conditions for export-oriented industries to thrive rather than survive.

Above all, it means political maturity — a recognition across parties that economic policy cannot reset with every change in power.

Pakistan does not lack talent or potential. It lacks sustained execution.

A nation cannot austerify its way to prosperity. Nor can it borrow its way out of structural weakness. Stabilisation without growth is stagnation by another name.

For international lenders, Pakistan’s story may read like a cautious success. For millions of citizens, it feels like prolonged strain with no visible payoff. The gap between those narratives is dangerous.

The spreadsheets look better. The streets do not.

Until economic recovery translates into rising incomes, meaningful jobs, and reduced inequality, declarations of turnaround will sound premature. Stabilisation has prevented collapse, and that matters. But preventing collapse is not the same as building prosperity.

Pakistan has stepped back from the edge. The harder question now is whether it dares to move forward.

This article was published by The Friday Times

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