IMF official warns ME conflict to affect regional growth, asks Pakistan to implement continued reforms

ISLAMABAD, (APP - UrduPoint / Pakistan Point News - 1st May, 2026) The Resident Representative of International Monetary Fund (IMF) in Pakistan Dr Mahir Binici has said that the ongoing middle East conflict is likely to create a significant economic slowdown and heightened risks across the Middle East, North Africa, Afghanistan and Pakistan (MENAP) region.

He was speaking at an outreach session here at Sustainable Development Policy Institute (SDPI), where he presented the IMF’s April 2026 Regional Economic Outlook Update regarding the MENAP region, said a press release.

Dr Binici said the outbreak of war on February 28 had triggered a severe and multifaceted shock, disrupting energy markets, trade routes and financial conditions, particularly around the Strait of Hormuz. These developments, he maintained, have also affected global logistics, as well as food and fertilizer prices, leading to a sharp slowdown in regional growth with downside risks.

Dr Binici said for oil-importing economies like Pakistan, the conflict had compounded the existing vulnerabilities through higher energy and food import costs, potential decline in remittances from Gulf-based workers and tighter financial conditions. He also emphasized for achieving macroeconomic stability, rebuilding fiscal and external buffers, in addition to protecting vulnerable segments through targeted and temporary support measures instead of giving broad-based subsidies.

Appreciating that Pakistan’s performance under the IMF’s Extended Fund Facility (EFF) programme had remained broadly on track, he said a staff-level agreement on the third review under the EFF and the second review under the Resilience and Sustainability Facility (RSF) had been reached in March.

He further said policy priorities for Pakistan included maintaining a prudent fiscal stance, ensuring a tight and data-driven monetary policy and advancing structural reforms.

Over the medium term, Dr Binici stressed the need for strengthening economic resilience through diversified trade routes, investment in critical infrastructure, enhanced regional cooperation and reforms to promote private sector-led inclusive growth. He added that continued implementation of reforms would be crucial for Pakistan to maintain stability and navigate an increasingly volatile regional and global environment.

Earlier, welcoming the IMF Country 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’s economy. The next tranche under the IMF programme was pending due to review by the Fund’s Executive board, he added.

Dr Suleri said Pakistan remained vulnerable to regional and global shocks due to limited preparedness, urging a shift away from blanket subsidies towards targeted and anticipatory social protection policies. He also called for policy focus on energy sector reforms, including negotiations on capacity payments and greater reliance on renewable sources.