Pakistan’s economy faces mounting pressure as a growing number of multinational corporations announce their withdrawal from the country, citing unsustainable operating conditions. This corporate retreat coincides with critical negotiations with the International Monetary Fund (IMF) for a $7 billion bailout program, underscoring the nation’s precarious fiscal position.
The latest departure is Procter & Gamble (P&G), which has ceased manufacturing operations at its facility and shifted to a third-party distribution model. This move follows a series of high-profile exits, including Shell’s complete operational shutdown, Microsoft’s scaling back, and Uber’s discontinuation of services in major cities like Karachi and Lahore. Other firms, such as Eli Lilly, Yamaha Motors, Telenor, and Eni, have also curtailed or ended their presence, alongside pharmaceutical giants like Pfizer and several foreign banks. Gillette Pakistan, a P&G subsidiary, reported revenues nearly halving to 1.5 billion rupees in the fiscal year ending June 2025, down from a peak of three billion rupees two years prior.
Analysts attribute these exits to a confluence of structural issues plaguing Pakistan’s business environment. The Pakistani rupee’s depreciation has inflated import costs and eroded profit margins, while inconsistent taxation policies and regulatory complexities have deterred long-term investments. Political instability and security concerns further compound the challenges, creating an atmosphere of unpredictability that global firms can ill afford. Foreign direct investment has plummeted, exacerbating unemployment and straining local supply chains. The loss of these companies threatens thousands of jobs and could inflate prices for consumer goods, from personal care products to pharmaceuticals, hitting low-income households hardest.
As these developments unfold, Pakistan is engaged in tense talks with the IMF over the second review of its $7 billion Extended Fund Facility (EFF), approved in September 2024. Negotiations, which began earlier this month, focus on revenue mobilization, fiscal sustainability, and structural reforms. The IMF has expressed flexibility on certain concessions, particularly in light of recent flood-related losses, but has raised concerns over discrepancies in Pakistan’s external debt data totaling $11 billion for fiscal years 2023-2024 and 2024-2025. These inconsistencies have prompted demands for greater transparency to ensure the program’s credibility.
Despite some slippages in reform implementation, Islamabad anticipates securing a new tranche by early November, pending IMF Executive Board approval. The government plans to brief the IMF on a new tariff policy framework aimed at bolstering energy sector viability. However, critics argue that without addressing root causes like currency volatility and bureaucratic inefficiencies, such infusions may provide only temporary relief.
The interplay between corporate flight and IMF dependency highlights Pakistan’s deepening economic vulnerabilities. With GDP growth projected at a modest 2.5% for 2025 and inflation lingering above 10%, the stakes could not be higher. Successful negotiations could stabilize reserves and restore some investor confidence, but failure risks further isolation.
For Pakistan, balancing immediate fiscal needs with long-term structural changes remains the core challenge. The international community, including bilateral lenders, watches closely, aware that sustained support hinges on demonstrable progress.