By Staff Reporter
KARACHI: The International Monetary Fund (IMF) has forecast a 2 percent GDP growth for Pakistan in the current fiscal year, marking a recovery from the previous year’s -0.2 percent downturn.
The revised outlook comes after a January adjustment that saw the IMF trim its forecast from 2.5 percent to 2 percent for the current year and from 3.6 percent to 3.5 percent for FY25, as reported in October 2023.
In its recent “World Economic Outlook,” released on Tuesday, the IMF published a report titled “Steady but Slow: Resilience amid Divergence,” on Pakistan and signals a positive shift in the country’s economic trajectory.
The IMF also anticipates a fall in inflation to 24.8 percent from 29.2 percent alongside a reduction in unemployment rates to 8 percent from 8.5 percent. These projections suggest a gradual stabilization of Pakistan’s economy, with further improvements expected in the coming years.
For the fiscal year 2025, the IMF projects a more robust GDP growth of 3.5 percent for Pakistan. Inflation is also expected to continue its downward trend, reaching 12.7 percent, while unemployment is projected to further decline to 7.5 percent.
Despite these positive domestic indicators, Pakistan’s current account balance is projected to remain in deficit at -1.1 percent for 2024, a slight deterioration from -0.7 percent in 2023, with a forecast of -1.2 percent for 2025.
Pakistan and the IMF last month reached a staff-level agreement on the second and final review of the $3 billion stand-by arrangement, which, if cleared by the global lender’s board, will release about $1.1 billion to the struggling South Asian nation.
The IMF’s board is expected to review the matter in late April, but no firm date has been set, a spokesperson said. Both sides have also spoken about negotiating a longer-term bailout and continuing with necessary policy reforms to rein in deficits, build up reserves, and manage soaring debt servicing.
Finance Minister Aurangzeb in Washington
Finance Minister Muhammad Aurangzeb said the country has initiated discussions with the IMF over a new multi-billion-dollar loan agreement to support its economic reform program.
“… during the course of this week, we have initiated the discussion with the Fund to enter a larger and extended program,” Aurangzeb told AFP, during a visit to Washington for spring meetings organized by the International Monetary Fund and World Bank.
An IMF spokesperson told AFP that the Fund is “currently focused on the completion of the current Stand-by Agreement program,” referring to the ongoing nine-month program scheduled for completion shortly.
“The new government has expressed interest in a new program, and Fund staff stands ready to engage in initial discussions on a successor program,” the spokesperson added. During his visit to Washington, Aurangzeb will also attend the spring meetings of the IMF and World Bank, which kick off earnestly on Tuesday, with two clear objectives: to help countries combat climate change, and to assist the world’s most indebted nations.
The meetings, which bring central bankers together with finance and development ministers, academics, and representatives from the private sector and civil society to discuss the state of the global economy, have begun with the IMF’s publication of its updated World Economic Outlook.
“I do think that we will be requesting at least a three-year program,” Aurangzeb said. “Because that’s what we need, as I see it, to help execute the structural reform agenda.” “By the time we get to the second or third week of May, I do think we’ll begin discussing the contours of that discussion,” he added.
Copyright © 2021 Independent Pakistan | All rights reserved
