Dr Mahir Binici, the IMF Resident Representative in Pakistan, told an outreach session at the Sustainable Development Policy Institute in Islamabad that the ongoing Middle East conflict is likely to trigger a significant economic slowdown and elevate risks across the Middle East, North Africa, Afghanistan and Pakistan (MENAP) region. He presented the IMF’s April 2026 Regional Economic Outlook Update and outlined the channels of impact.
Dr Binici said the outbreak of war on February 28 has produced a severe, multifaceted shock by disrupting energy markets, trade routes—particularly around the Strait of Hormuz—and global logistics. Rising food and fertilizer prices have already weighed on growth prospects across the region, creating downside risks for the Pakistan economy and its neighbours.
For oil-importing countries such as Pakistan, the conflict compounds existing vulnerabilities through higher energy and food import bills, the prospect of lower remittances from Gulf-based workers and tighter financial conditions. These pressures, the IMF representative warned, could slow domestic demand and complicate efforts to stabilise public finances and the external position.
The IMF recommended rebuilding fiscal and external buffers while protecting vulnerable households with targeted, temporary support rather than broad-based subsidies. Dr Binici noted that Pakistan’s performance under the IMF Extended Fund Facility programme has remained broadly on track, with a staff-level agreement on the third EFF review and the second Resilience and Sustainability Facility review reached in March. Policy priorities include maintaining a prudent fiscal stance, a tight, data-driven monetary policy and advancing structural reforms to support recovery.
Over the medium term the IMF urged strengthening resilience through diversified trade routes, investment in critical infrastructure, deeper regional cooperation and reforms to promote private sector-led inclusive growth. Continued implementation of these reforms will be essential for the Pakistan economy to navigate a more volatile regional and global environment.
Welcoming the IMF resident representative, SDPI Executive Director Dr Abid Qaiyum Suleri said the discussion aimed to assess evolving regional and global dynamics and their implications for Pakistan. He noted the next tranche under the IMF programme remains pending review by the Fund’s Executive Board and reiterated that Pakistan remains exposed to shocks due to limited preparedness. Dr Suleri urged a shift away from blanket subsidies toward targeted and anticipatory social protection and called for focused energy sector reforms, including negotiations on capacity payments and greater reliance on renewable sources.
