By Asad Ali Shah

Pakistan continues to face a recurring economic pattern in which temporary financial relief is followed by renewed fiscal stress, raising questions about the country’s long-term reform trajectory.

Each time Pakistan secures a bailout or debt rescheduling agreement from the International Monetary Fund, the immediate pressure on foreign reserves and fiscal balances eases. However, economists argue that this relief is frequently treated as permanent fiscal space rather than temporary stabilization support.

As a result, public spending expands, politically difficult structural reforms slow down, and underlying vulnerabilities remain unaddressed. Over time, macroeconomic imbalances resurface, forcing the country back into negotiations with external lenders.

Analysts describe this pattern as a deeply entrenched political economy equilibrium rather than a series of isolated fiscal management failures. Within this framework, short-term political incentives often outweigh long-term economic considerations.

External financing, critics argue, functions less as a bridge toward reform and more as a mechanism to postpone difficult policy decisions, including tax broadening, energy sector restructuring, and state-owned enterprise reform.

This recurring cycle has persisted for decades, shaping Pakistan’s economic landscape for nearly 80 years. The country’s repeated engagement with the IMF reflects not only fiscal constraints but also structural incentive challenges within its governance system.

Economists note that meaningful reform carries immediate political costs, while the benefits are typically gradual and diffuse. In contrast, expansionary spending and subsidy measures offer short-term political gains.

The central question, observers suggest, is no longer why Pakistan returns to the IMF. Rather, it is who within the existing system has the incentive to disrupt this equilibrium — and who is willing to bear the political and economic cost of long-term structural change.

Without a shift in incentive structures, experts warn, the cycle of relief today and crisis tomorrow may continue to define Pakistan’s economic future.