Pakistan has developed an unusual economic model: governments come and go, creditors stay and the debts grow larger. According to the World Bank’s International Debt Report 2026, the country’s external debt rose from $68.7 billion in 2015 to $135.1 billion in 2025. China remains its largest individual creditor, followed by the World Bank and Asian Development Bank.
Meanwhile, public liabilities, including domestic borrowing, have crossed the psychologically alarming threshold of Rs100 trillion. These numbers tell only half the story. The other half concerns a political system that has repeatedly prevented elected governments from completing their work, while allowing institutions without electoral mandates to exercise considerable influence over economic decision-making.
Over the past decade, Pakistan has experienced political disqualifications, disputed elections, mass protests, parliamentary confrontations, judicial interventions, arrests of political leaders and repeated confrontations between civilian authorities and the generals and judges. These disruptions were not the sole causes of economic decline. Fiscal indiscipline, poor taxation, uncompetitive exports, energy-sector inefficiencies and external shocks contributed enormously.
But political instability made almost every economic weakness harder to remedy. Consider the procession of prime ministers since 2015: Nawaz Sharif (2013–17), Shahid Khaqan Abbasi (2017–18), caretaker Nasir-ul-Mulk (2018), Imran Khan (2018–22), Shehbaz Sharif (2022–23), caretaker Anwaar-ul-Haq Kakar (2023–24) and Shehbaz Sharif again since March 2024. Seven premierships, held by six individuals, have presided over a country apparently incapable of maintaining a stable economic direction.
The first great rupture came in 2017. Nawaz Sharif, whose government had overseen substantial infrastructure development and the launch of the China-Pakistan Economic Corridor, was disqualified by the Supreme Court following the Panama Papers controversy. Accountability was a legitimate concern. But removing a prime minister halfway through an economic programme carried institutional and economic costs. The PML-N government had itself made serious mistakes. Its management of the exchange rate discouraged exports, while infrastructure investment was not matched by productivity improvements. Nevertheless, the political upheaval weakened policy continuity. The Faizabad protests later that year, and the military’s controversial mediation of the dispute, further demonstrated how readily civilian authority could be undermined.
The 2018 election brought Imran Khan to power amid widespread allegations of establishment involvement in political engineering. Khan promised a transformed economy, an end to corruption and greater national self-reliance. Instead, his government struggled with fiscal imbalances, shifting economic priorities and personnel changes. His first finance minister, Asad Umar, was replaced by Abdul Hafeez Shaikh, followed by a brief appointment of Hammad Azhar and then Shaukat Tarin. The frequent reshuffling reflected a deeper problem: economic strategy remained vulnerable to political expediency.
The government obtained an IMF programme in 2019, struggled with its conditions and then faced the Covid-19 pandemic. Khan’s administration also deserves credit for its pandemic-era social protection measures and some improvements in external-account management. But its reluctance to tackle structural weaknesses meant it mistook temporary recovery for lasting reform.
Then came the rupture of 2022. Khan lost a parliamentary vote of no-confidence after relations with the military leadership deteriorated and coalition partners deserted him. The vote was constitutionally legitimate; the broader political environment was deeply polarised. Khan accused his opponents and foreign actors of conspiring against him, allegations that were not substantiated. Political mobilisation, rather than economic reconstruction, became the national obsession.
Shehbaz Sharif inherited an economy already exposed to rising international prices, depleted confidence and formidable financing requirements. His coalition then changed finance ministers from Miftah Ismail to Ishaq Dar, illustrating how party calculations could override consistency. In 2022, catastrophic floods inflicted more than $30bn in estimated damages and economic losses. By May 2023, inflation had reached 38%.
Pakistan approached another balance-of-payments emergency. The arrests and political confrontations following the events of May 9, 2023, deepened uncertainty. Instead of conducting a brief transition, the caretaker government of Anwaar-ul-Haq Kakar remained in office for more than six months. Its finance minister, Shamshad Akhtar, was another technocratic appointment operating within a political arrangement lacking a direct electoral mandate.
The February 2024 election did little to settle the legitimacy question. PTI-backed independent candidates won the largest group of directly contested National Assembly seats, but the PML-N and PPP assembled a governing coalition. The Human Rights Commission of Pakistan raised serious concerns about electoral integrity, including delays in result reporting and restrictions on communications. Such controversies weaken the confidence on which long-term investment depends.
There is another peculiarity in Pakistan’s economic management: its political parties have seldom cultivated strong, durable teams of professional economists capable of developing coherent programmes before entering government. Instead, they frequently recruit bankers, accountants, corporate executives and technocrats. Ishaq Dar is a chartered accountant. Shaukat Tarin and Muhammad Aurangzeb come principally from banking. Hafeez Shaikh and Miftah Ismail, by contrast, have formal training in economics.
Pakistan’s problem is therefore not literally an absence of economists, but their limited institutional influence and the absence of economic-policy continuity. Bankers understand liquidity, credit and financial stability. Accountants understand balance sheets. Both bring valuable skills. But neither background automatically confers expertise in development economics, industrial transformation, agricultural productivity, labour markets or the political economy of inequality.
A banker may negotiate a debt rollover; an economist must also ask why the country needs another one. A finance minister may stabilise the exchange rate; a development strategist must explain how firms will become productive enough to earn foreign exchange independently. Economic policymaking has also become increasingly detached from civilian accountability.
Since 2023, the Special Investment Facilitation Council has formally incorporated military participation into economic coordination. Its stated purpose is to accelerate investment, but it does raise the question of who ultimately determines economic priorities, and who voters can hold responsible when they fail.
The distribution of authority and responsibility has become dangerously unequal. Elected governments face the voters and absorb political blame, while other institutions can influence decisions without bearing equivalent electoral consequences. A country cannot have competing centres of power and expect a coherent economic strategy.
Meanwhile, the debt machine continues operating. Pakistan’s energy-sector circular debt remains stubbornly high despite tariff increases, renegotiated power contracts and repeated financial restructuring. Borrowing has repeatedly financed repayments rather than new productive capacity. The burden falls disproportionately on households through taxation, inflation and expensive electricity. There are, admittedly, signs of improvement. The World Bank reports that GDP growth reached 3.7% in FY2026, compared with 3.2% the previous year, accompanied by stronger fiscal balances and recovering reserves. These achievements should be acknowledged. Yet stabilisation is not transformation. Productivity remains weak, employment generation inadequate and the economy vulnerable to another external shock.
Pakistan needs more than an IMF exit strategy. It needs governments capable of completing constitutional terms, parliamentary oversight of economic and foreign policy, credible elections, independent economic institutions and political parties that invest in serious economic expertise. The next government should inherit a national economic framework, not another emergency. Tax reform, competitive exports, energy restructuring, investment in education and productivity growth require commitments extending beyond electoral cycles. Federalism must be respected, provinces held accountable and the civilian executive allowed to govern without constant interference.
Above all, Pakistan must abandon the illusion that political instability can coexist indefinitely with economic recovery.
The writer is dean of the faculty of liberal arts at a private university in Karachi. He tweets/posts @NaazirMahmood and can be reached at: [email protected]
Disclaimer: The viewpoints expressed in this piece are the writer’s own and don’t necessarily reflect Geo.tv’s editorial policy.
Originally published in The News
