Pakistan’s new government seeks more IMF assistance

​Former Prime Minister of Pakistan Nawaz Sharif speaks at the party office of Pakistan Muslim League in Lahore, Pakistan, February 9, 2024.
Former Prime Minister of Pakistan Nawaz Sharif speaks at the party office of Pakistan Muslim League in Lahore, Pakistan, February 9, 2024.
REUTERS/Navesh Chitrakar

On top of facing legitimacy questions following chaotic, violent elections tainted by widespread undemocratic practices, Pakistan’s new coalition government is inheriting an economy in crisis. These economic problems have been fueled by high energy costs, political dysfunction, flooding, and supply chain issues.

An economy in freefall. Pakistan inflation hovers around a whopping 30%, and its GDP fell 0.6% in 2023, per the World Bank. Meanwhile, Tabadlab, an Islamabad-based think tank, recently warned that the country’s debt is a “raging fire” that’s become unsustainable: Interest payments are eating up roughly 57% of government revenues.

“Unless there are sweeping reforms and dramatic changes to the status quo, Pakistan will continue to sink deeper, headed towards an inevitable default,” Tabadlab’s report said.

What can be done? Pakistan barely avoided debt default last year thanks to the help of a short-term IMF lending agreement, but that’s set to expire in April. The incoming government reportedly plans to pursue a $6 billion loan from the IMF to help it stay afloat. The IMF has signaled it’s open to discussing another arrangement with the new government, but we’ll be watching to see whether Pakistan’s political turmoil becomes an obstacle to securing more funds.

More from GZERO Media

Listen: In seven short weeks, the Trump administration has completely reshaped US foreign policy and upended trade alliances. Will China benefit from US retrenchment and increasing global uncertainty, or will its struggling economy hold it back? On the GZERO World Podcast, Bill Bishop, a China analyst and author of the Sinocism newsletter, joins Ian Bremmer for a wide-ranging conversation about China—its domestic priorities, global administration, and whether America’s retreat from global commitments is opening new doors for Beijing.

German Chancellor-in-waiting Friedrich Merz speaks to the media after he reached an agreement with the Greens on a massive increase in state borrowing just days ahead of a parliamentary vote next week, in Berlin, Germany, on March 14, 2025.
REUTERS/Axel Schmidt

Germany’s election-winning center-right Christian Democratic Union/Christian Social Union, led by Friedrich Merz, and the Social Democrats have reached a preliminary agreement with the Green Party on a deal to exclude defense spending from the country’s constitutional debt break and establish a dedicated $545 billion fund for infrastructure investments.

A Russian army soldier walks along a ruined street of Malaya Loknya settlement, which was recently retaken by Russia's armed forces in the course of Russia-Ukraine conflict in the Kursk region, on March 13, 2025.

Russian Defence Ministry/Handout via REUTERS

The Russian leader has conditions of his own for any ceasefire with Ukraine, and he also wants a meeting with Donald Trump.

Mahmoud Khalil speaks to members of the media about the Revolt for Rafah encampment at Columbia University on June 1, 2024.

REUTERS/Jeenah Moon

The court battle over whether the US can deport Mahmoud Khalil, the 30-year-old Palestinian-Algerian activist detained in New York last Saturday, began this week in Manhattan. Khalil, an outspoken activist for Palestinian rights at Columbia University, was arrested Saturday at his apartment in a university-owned building at Columbia University by Immigration and Customs Enforcement officers, and he is now being held in an ICE detention center in Louisiana.

The Israeli Air Force launched an airstrike on Thursday, targeting a building in the Mashrou Dummar area of Damascus.
(Photo by Rami Alsayed/NurPhoto)

An Israeli airstrike destroyed a residential building on the outskirts of Damascus on Thursday in the latest Israeli incursion into post-Assad Syria.

Lars Klingbeil (l), Chairman of the SPD parliamentary group, and Friedrich Merz, CDU Chairman and Chairman of the CDU/CSU parliamentary group, talk at the end of the 213th plenary session of the 20th legislative period in the German Bundestag.

Germany’s government is in a state of uncertainty as the outgoing government races to push through a huge, and highly controversial, new spending package before its term ends early this spring.

EPA Administrator Lee Zeldin, a Republican, speaks as the U.S. vice president visits East Palestine, Ohio, U.S., February 3, 2025.
Rebecca Droke/Pool via REUTERS/File Photo

On Wednesday, Environmental Protection Agency chief Lee Zeldin redefined the agency’s mission, stating that its focus is to “lower the cost of buying a car, heating a home, and running a business.”