Pakistan’s Economy and Upcoming Federal Budget: Challenges and Policy Efforts

Pakistan’s economy is passing through a critical phase marked by fragile macroeconomic stabilization alongside deep-rooted structural vulnerabilities. The forthcoming federal budget for 2026-27 assumes heightened significance as the country navigates inflationary pressures, external sector risks, IMF conditionalities, and growing demands for inclusive development. This policy brief examines the current state of the economy, outlines the key challenges confronting the budget, and presents policy recommendations aimed at shifting economic management from short-term stabilization toward long-term, development-oriented growth.