The International Monetary Fund (IMF) has projected Pakistan’s GDP growth to reach 3.2 per cent during FY25, an increase from the 2.4 per cent recorded in the previous fiscal year.
This forecast surpasses the Asian Development Bank’s (ADB) projection of 2.8 per cent growth for the current fiscal year.
In its latest report, the IMF noted a significant reduction in inflation, attributed to stringent fiscal and monetary policies. A stable current account and foreign currency market have facilitated the rebuilding of reserve buffers, leading to an anticipated inflation rate drop to 9.2 per cent in FY25, down from 23.4 per cent in FY24.
The IMF expects Pakistan’s current account deficit to rise moderately to 0.9% of GDP in FY25, compared to 0.2 per cent in FY24. Additionally, the unemployment rate is projected to decline from 8 per cent to 7.5 per cent by June 2025.
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Despite these positive trends, the IMF cautions that Pakistan faces ongoing vulnerabilities and structural challenges. The organisation forecasts a significant improvement in the country’s foreign exchange reserves, predicting they will reach $12.757 billion by June 2025, up from $9.38 billion in FY24.
These optimistic projections follow the IMF Executive Board’s approval of a $7 billion Extended Fund Facility (EFF) for Pakistan. Subsequently, the State Bank of Pakistan (SBP) received the first tranche of SDR 760 million (approximately $1.03 billion) from the IMF on Friday. These inflows will be reflected in SBP reserve data, scheduled for release on October 3, 2024.
The Pakistani authorities and the IMF had previously reached a staff-level agreement on the EFF, amounting to SDR 5,320 million (around $7 billion) on July 12.
