IMF flags Pakistan risks amid MENAP slowdown

May 02, 2026 (MLN): The International Monetary Fund (IMF) has warned that the ongoing Middle East conflict is likely to slow economic growth across the Middle East, North Africa, Afghanistan and Pakistan (MENAP) region, with Pakistan facing heightened risks due to rising energy and food import costs, potential declines in remittances and tighter financial conditions.

Presenting the IMF’s April 2026 Regional Economic Outlook Update, Resident Representative Dr Mahir Binici said the war that erupted on February 28 has disrupted energy markets, trade routes particularly around the Strait of Hormuz and global supply chains, leading to increased volatility and downside risks for regional economies.

Dr Binici shared these insights during an outreach session at the Sustainable Development Policy Institute (SDPI), where Executive Director Dr Abid Qaiyum Suleri highlighted Pakistan’s vulnerability to external shocks and stressed the need for targeted social protection and energy sector reforms.

The IMF official noted that Pakistan’s performance under the Extended Fund Facility (EFF) remains broadly on track, with a staff-level agreement reached in March for the third review under the EFF and the second review under the Resilience and Sustainability Facility (RSF), while the next tranche awaits approval by the IMF Executive Board, according to a press release issued.

The IMF emphasized that Pakistan must maintain a prudent fiscal stance, pursue tight and data-driven monetary policy and accelerate structural reforms to ensure macroeconomic stability.

It also highlighted the importance of rebuilding fiscal and external buffers, avoiding broad subsidies in favor of targeted support for vulnerable groups and strengthening long-term resilience through trade diversification, infrastructure investment, regional cooperation and private sector-led inclusive growth.

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