Farhan Qureshi 
Pakistan has increasingly used international financial and development forums to advance Pakistan Global South finance reforms that would give developing countries greater influence over the design and delivery of development finance. Islamabad has called for greater inclusiveness in global economic governance, expanded access to concessional financing, meaningful debt relief and stronger implementation of commitments made by the international community.
It is also an approach that supports country-led development strategies rather than financing frameworks that reflect donor priorities. Pakistan’s interest in reforming the Global South’s approach to international finance was clear when Finance Minister Muhammad Aurangzeb called for development strategies based on national priorities and greater South-South cooperation at the 2025 Financing for Development conference.
This diplomatic role of Pakistan is closely tied to domestic economic needs. Having a stronger voice in global institutions could allow developing countries to have a say in the financial rules that affect their economies, while improved access to affordable development and climate finance could open the door for more resources for infrastructure, resilience and social development.
Economic Stability Is The Foundation For Reform
Fiscal consolidation under Pakistan’s current IMF program has made progress. The IMF observed that the general government primary surplus stood at 3.2% of GDP in the first half of FY2026, above the program target for the period, while the authorities maintained a commitment to a 1.6% underlying primary balance target for FY2026 and 2% for FY2027.
The IMF also noted that GDP growth picked up, inflation remained contained, and the current account was broadly in balance in the first nine months of FY2026. At the same time, the Fund has highlighted the need for continued structural reforms to preserve stability, build resilience and lay the ground for stronger medium-term growth.
This mixture of progress and constant pressure makes Pakistan a defining voice in financial conversations on the Global South. Fiscal improvements can reinforce the credibility of reform efforts, while outstanding structural issues underscore why access to predictable and affordable external financing is still important for the country.
Debt Costs Remain A Key Part Of Pakistan’s Finance Strategy
Servicing Pakistan’s external and domestic liabilities remains central to the country’s approach to international financing. High financing needs can restrict fiscal space for development spending, especially when shocks to the economy increase the pressure on reserves, public finances and social programs.
The wider Global South is also dealing with similar concerns. The IMF and the World Bank recently approved changes to the joint debt sustainability framework for low-income countries, with more focus on domestic debt, climate-related long-term risks, forecasting and transparency. The changes are part of a broader effort to make debt assessments more responsive to the increasingly complex risks facing developing economies.
The debate for Pakistan underscores the need to tie financial stability with development needs. Islamabad’s demand for concessional finance and debt relief is particularly relevant for climate-vulnerable economies, which face substantial fiscal costs from disasters and also see demand for public investment rise.
Climate Finance In Pakistan Is Gaining Significance
Pakistan’s vulnerability to floods, heatwaves and other climate shocks makes its case for better access to climate finance. The World Bank has warned Pakistan is “highly vulnerable” to recurrent floods, intensifying heatwaves and accelerated glacial melt, with these risks affecting fiscal stability, livelihoods and poverty reduction.
Climate finance can thus play a role beyond environmental policy in financing infrastructure prepared for future shocks. Pakistan is also carrying out reforms under the IMF’s Resilience and Sustainability Facility, including in the areas of climate information, green mobility, climate-related financial risks and disaster-risk financing.
Thus, the country’s Global South advocacy links international finance to domestic resilience. Cheaper adaptation finance could allow Pakistan to invest in water systems, disaster preparedness, energy transition and climate-resilient infrastructure without the full burden being borne by its already constrained public finances.
IMF Engagement Influences Reform Priorities
Pakistan’s role in international financial discussions cannot be viewed outside its current IMF program. The Fund has identified revenue mobilisation, expenditure discipline, energy sector viability, state-owned enterprise reform, governance and private sector development as important elements of the country’s economic program.
The IMF has also noted progress on structural measures in Pakistan and called for their continued implementation. The program includes measures to broaden the tax base, improve tax administration, reduce regulatory barriers and strengthen governance, as well as measures to improve the performance of state-owned enterprises and the energy sector.
This establishes an important linkage between Pakistan’s external advocacy and domestic reform agenda. Calls for changes to the international financial architecture can broaden the policy debate, but continued implementation of domestic reforms remains central to improving fiscal resilience and reducing repeated reliance on emergency financing.
Energy Sector Reform: A Major Challenge
The energy sector remains one of the major areas for structural reform in Pakistan. The IMF has flagged preventing renewed circular debt as a priority and called for measures to improve distribution efficiency, strengthen cost recovery, reduce distortions and encourage greater private-sector participation.
The reform agenda includes private sector participation in electricity distribution companies and wider changes to improve governance and financial sustainability. The latest Pakistan review by the IMF also points to delays in parts of the distribution-sector process, illustrating how implementation can be more complex than setting reform objectives.
The resolution of problems in the energy sector may have wider economic implications for Pakistan. More efficient electricity markets can underpin industrial activity, enhance investment conditions and ease the fiscal pressures that result from the recurrent use of public resources to cover structural losses.
Privatisation Is Part Of Pakistan’s Structural Reform Agenda
Pakistan has also continued with a program of privatisation of several state-owned enterprises. The IMF said two privatisations, including Pakistan International Airlines, had been agreed since October 2025, and further work was continuing on other enterprises and electricity distribution companies.
The overall goal is to reduce the state’s footprint in terms of operations, while enhancing governance, efficiency and service delivery. The IMF has linked progress on SOE reform to stronger institutional capacity, transparent processes and safeguards to prevent future erosion of the reform framework.
Privatisation is thus part of a broader process of economic restructuring, and not divorced from Pakistan’s Global South finance agenda. Enhanced efficiency of domestic institutions can improve the country’s ability to make effective use of external development finance and ease some of the stressors that give rise to recurring financing requests.
US Funding Plans Seek Broader Support
International interest was also focused on Pakistan’s efforts to diversify external sources of finance in 2026. Islamabad has sought a proposed $10 billion US exchange stabilisation fund and a separate trade-finance facility during talks with US officials, the Reuters news agency reported. The proposals were presented as steps to boost foreign exchange reserves, underpin the stability of the currency and expand Pakistan’s options for external financing.
Economists were sceptical that more financing would cure deep-seated structural problems in taxation, energy and state-owned enterprises, Reuters also said. External support would not replace reforms to improve debt sustainability and strengthen the domestic economic base, the analysis noted.
The debate points to a larger problem for Pakistan’s financial role in the Global South. Islamabad can advocate for better international financing mechanisms, while at the same time demonstrating that external resources are accompanied by domestic institutional and economic reforms.
South-South Cooperation: An Avenue To Broaden Economic Options For Pakistan
Pakistan’s model of development finance also features its promotion of South-South cooperation. The model provides an opportunity for developing countries to share technical expertise, investment, technology and policy experience, without being dependent solely on traditional donor relations. Pakistan has been a strong advocate of South-South cooperation, especially for a more context-driven approach to development.
Such cooperation may be more relevant as developing economies look for new sources of investment and trade. Pakistan’s geography, industrial base and connections throughout Asia, the Middle East and other parts of the Global South present opportunities for stronger economic ties.
How well this works depends on the quality of institutions at home and on the existence of partnerships abroad. Stronger exports, better productivity, stability in the energy sector and predictable regulations can help Pakistan translate international economic relationships into longer-term development opportunities.
Need Action At Home And Abroad On Financial Reform
Pakistan’s position in the Global South finance debate is shaped by two interlinked priorities: reform of international financial structures and strengthening domestic foundations to make the most of them. Internationally, Islamabad is pushing for greater equity in access to concessional finance, debt relief, climate funds and a bigger voice in global economic governance.
At home, the reform agenda features stronger revenue mobilisation, restructuring of the energy sector, reform of state-owned enterprises, better governance and a more private sector-driven economy. These measures, along with fiscal consolidation and climate resilience, are part of the IMF’s current program, underscoring how closely financial stability and structural reform remain linked.
Continued progress on both fronts could bolster Pakistan’s position in future talks on Global South finance. A stronger domestic economic base would make the use of development funding more effective, and a more representative international financial architecture would give Pakistan and other developing countries more space to address debt, climate and development pressures through longer-term financing arrangements.
