Are Rupee Stabilization Policies Working?

While Pakistan’s military asserts dominance in the skies, the nation’s economy is quietly charting an impressive recovery from the brink of default. In 2024 and early 2025, a series of prudent fiscal and monetary policies have yielded tangible results, signaling a potential economic renaissance.

Current Account Surplus:

For the first time in years, Pakistan recorded a current account surplus, reaching $1.88 billion from July to April FY2024-25, a significant turnaround from a $1.337 billion deficit during the same period last year.

Primary Fiscal Surplus:

The country achieved a primary fiscal surplus of 2.4% of GDP, marking its first fiscal surplus in 24 years.

Inflation at Multi-Decade Lows:

Inflation rates have plummeted, with the year-on-year rate dropping to 4.07% in December 2024, and an average rate of 7.22% for the first half of FY2024-25 .

IMF Programs Greenlit:

The International Monetary Fund approved a $7 billion Extended Fund Facility for Pakistan in September 2024, with the second tranche of $1.023 billion disbursed in May 2025 .

KSE-100 Index Surges:

The Karachi Stock Exchange’s KSE-100 Index soared to an all-time high of 116,169 points in December 2024, reflecting investor confidence in the country’s economic trajectory .

Stable Rupee and Improved CDS:

The Pakistani Rupee stabilized in 2024 after years of depreciation, while the country’s Credit Default Swap (CDS) spreads dropped by 93%, indicating reduced default risk .

These developments suggest that Pakistan’s economic stabilization policies are yielding positive outcomes. However, sustaining this momentum will require continued fiscal discipline, structural reforms, and adherence to international commitments.