ISLAMABAD: Pakistan’s latest IMF-backed stabilization drive has coincided with a widening strain on its real economy, as manufacturers cite high power costs, heavy taxation and policy uncertainty while several multinational companies scale back or restructure local operations. The International Monetary Fund says its 37-month Extended Fund Facility, approved on September 25, 2024, is intended to rebuild reserves, broaden the tax base and restore energy-sector viability, but the adjustment burden has been felt acutely by factories and consumers.
Pakistan has returned to the IMF repeatedly over decades, underscoring chronic balance-of-payments pressures and weak tax collection. The IMF lists 25 arrangements for Pakistan since it joined in 1950, a record that has entrenched periodic stabilization cycles. The current program has been paired with reforms that include tighter fiscal policy and changes in energy pricing, steps that improve macro indicators on paper while raising operating costs across energy-intensive industries.
Industrial groups and local reporting have described widespread shutdowns in parts of the manufacturing belt, particularly among small and mid-sized units that rely on grid electricity and imported inputs. Business associations have blamed elevated tariffs, financing costs and inconsistent enforcement for production cuts and job losses, with textiles repeatedly cited as a sector under stress despite its central role in export earnings. The pattern has added to pressure on household incomes already eroded by years of inflation and currency weakness.
The IMF has pointed to measurable stabilization since the program began. In a December 8, 2025 statement, it said Pakistan’s policy efforts delivered “significant progress” in rebuilding confidence, citing a primary surplus of 1.3% of GDP in fiscal year 2025 and gross reserves of $14.5 billion at end-FY25, up from $9.4 billion a year earlier. The Fund said its board decision enabled immediate disbursements of about $1 billion under the EFF and about $200 million under a resilience facility, taking combined disbursements to about $3.3 billion.
Industrial squeeze and corporate pullbacks
While macro buffers improved, a series of high-profile corporate moves highlighted challenges in the business environment. Careem, the Middle East-based ride-hailing company owned by Uber, said in June 2025 it would suspend its Pakistan ride-hailing service on July 18, citing economic challenges, rising competition and capital constraints. The suspension ended nearly a decade of operations that began in 2015 and underscored the pressure on Pakistan’s consumer-demand and technology sectors.
In consumer goods, Gillette Pakistan said on October 2, 2025 it would evaluate a potential delisting from the Pakistan Stock Exchange after its parent, Procter & Gamble, decided to discontinue its business in Pakistan as part of a global restructuring program. P&G said it would wind down manufacturing and commercial activities and rely on third-party distributors to continue serving customers. Such shifts reduce local production footprints and can weaken supplier networks built around onshore manufacturing.
Energy-sector divestments have also been prominent. Shell announced in November 2023 that it agreed to sell its 77.42% majority stake in Shell Pakistan Limited to Saudi Arabia’s Wafi Energy, part of a broader exit from the market pending approvals and completion processes. In August 2024, TotalEnergies agreed to sell its 50% stake in Total PARCO Pakistan Limited to commodities trader Gunvor Group, a deal that requires regulatory clearance and keeps retail operations under existing branding for a limited period.
Program goals and on-the-ground tradeoffs
The IMF has framed the reform package around longer-term competitiveness, including broadening the tax base, strengthening competition and reforming state-owned enterprises, particularly in the energy sector. Those priorities address longstanding fiscal and external imbalances, but the near-term impact has been tighter liquidity and higher administered costs in parts of the economy. For manufacturers with thin margins and limited access to foreign exchange, the combination of taxation, tariffs and compliance burdens has been cited as a decisive factor in scaling back output or suspending operations.
The immediate question for policymakers has been how to preserve industrial capacity and employment while meeting program benchmarks meant to unlock external financing and reduce default risk. Pakistan’s repeated reliance on IMF programs has made reform sequencing politically and economically fraught, especially when price adjustments hit electricity, fuel and other essentials. With corporate restructurings and factory closures drawing public attention, the government faces rising scrutiny over whether stabilization gains can translate into durable investment, exports and job creation without renewed disruptions to production.