Pakistan’s inflation could rise to 6.3% this year, 8.9% by mid-2026: IMF

Inflation in Pakistan is expected to rise in the coming months, the International Monetary Fund said in its latest assessment, which was released as the country implements reforms tied to an IMF loan program.

The IMF projected that Pakistan’s inflation rate, which had been estimated at 4.5%, could climb to about 6.3%. By June 2026, inflation may reach 8.9%, compared with 3.2% in June this year.

The Fund also released its review of Pakistan’s economic performance over the past two years along with projections for the current fiscal year. Economic growth is expected to reach 3.2% this year, it said.

Unemployment may slightly decline, falling from 8% to 7.5%, according to the report.

The IMF noted several fiscal and structural indicators linked to Pakistan’s reform commitments. The tax-to-GDP ratio is projected to increase to 16.3% in fiscal year 2025-26, up from 15.9% in FY25. The fiscal deficit is expected to narrow to 4% in 2026, compared with 5.4% in 2025.

Pakistan’s debt burden is forecast to ease marginally, falling to 69.6% of GDP in FY26 from 70.6% the previous year. External debt is expected to remain stable at 22.5% of GDP.

Investment as a share of the economy may decline slightly to 0.5% in 2026, down from 0.6% in 2025.

Foreign exchange reserves, boosted by IMF disbursements and improved external flows, could rise to $17.8 billion in 2026, up from $14.5 billion in 2025.

The projections come as Pakistan works to meet conditions for continued support under the IMF program, which aims to stabilize the economy through tighter fiscal measures, improved revenue collection and reforms to reduce debt vulnerabilities.