New Delhi, June 8, 2026
Pakistan’s fiscal system continues to reflect deep structural weaknesses and elite-driven policymaking, with the International Monetary Fund (IMF) emerging as one of the few external constraints on unchecked government spending, a report has said.
The report published in The Express Tribune highlighted that recurring budget cycles in Pakistan are marked by fiscal indiscipline, inefficient allocation of resources and continued reliance on external oversight to maintain macroeconomic stability.
It noted that successive governments have struggled to rein in expenditure pressures, with spending patterns often influenced by political incentives, elite interests and efforts to secure short-term voter support through subsidies and concessions.
In the absence of IMF-backed fiscal frameworks, government spending could have become significantly more expansionary, leading to higher deficits and deeper macroeconomic instability.
Instead of structural reforms, Pakistan’s fiscal approach has largely relied on incremental adjustments, while maintaining a system that continues to favour politically connected groups and large business interests.
Persistent financial burden of state-owned enterprises (SOEs), describing them as a major drag on public finances due to cumulative losses running into hundreds of billions of rupees annually.
“The monstrous white elephants known as the State-Owned Enterprises (SOEs) have together incurred a loss of Rs 833 billion (Pakistani rupee). That is Rs 8,300 crore,” the report said.
According to the report, such losses underscore the lack of progress in privatisation or restructuring efforts, despite repeated policy discussions around improving efficiency and reducing fiscal strain.
It further noted that promised administrative reforms, including downsizing of government and consolidation of ministries, have largely failed to materialise in meaningful terms.
As a result, fiscal pressures continue to be passed on to taxpayers through rising taxes and constrained public spending, while structural inefficiencies remain largely unaddressed.
While IMF oversight has helped impose a degree of fiscal discipline, it also highlights the absence of sustained domestic reform momentum, leaving Pakistan’s budgetary framework vulnerable to recurring cycles of stress, the report said.(Agency)
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