Islamabad:
Pakistan informed the International Monetary Fund (IMF) that it expects the economy to increase by 3.1% and that the current account will be largely balanced during this exercise following higher funds and economic stabilization policies will continue during the next year.
For the next fiscal year, the government could allow the economy to increase to 4.5% and a current account deficit of $ 3 billion compared to a deficit close to zero during this exercise, according to a briefing at the IMF on the macroeconomic framework of the country.
Friday, the Ministry of Finance informed the world lender of macroeconomic projections for the 2024-25 in progress and the next fiscal 2025-26, exhibiting a sustainable and stable path of economic growth.
The world lender did not immediately share his mind with the government and another meeting is expected next week as part of the current parley under the first examination of the prolonged fund of funds of $ 7 billion.
For the next fiscal year, the IMF has been informed that the government could set the objective of economic growth of 4.5% and the inflation target of 7%. But these figures remain temporary until they are approved by the Federal Cabinet and the National Economic Council.
According to the Briefing of the Ministry of Finance in the IMF, the economy can grow at a rate of 3.1% during the current financial year, which is lower than the official objective of 3.6% but is largely in line with the predictions of international financial institutions.
The assessment of the Ministry of Finance indicates that the agriculture sector can only increase 1.3% and that the major growth of growth will come from the service sector, said sources.
However, the economy remains vulnerable to natural disasters and climate risks, in particular floods and droughts disturbing agriculture and infrastructure that can threaten food security and budgetary stability, thus hampering economic growth.
The agriculture sector is also faced with the negative impact of abnormal weather conditions and wheat production should be much lower than the official target of 27.9 million tonnes this year.
Wheat has been sown on an area of 22.1 million acres, which is lower than the objective and can cause shortages, according to the Ministry of National Food Security and research officials. They said it was too early to say anything with certainty, but wheat production could fall below 27 million tonnes due to meteorological variability. Last year, production was 31.4 million tonnes.
Major-General (REPD) Shahid Nazir, the director general of the Green Corporate initiative on a military back, said on Tuesday at the special meeting of the federal firm that this year, the “production of bumper wheat” was expected.
The major negative impact of the weather was on cotton harvest whose production is estimated at only 7.2 million bullets, or 30% or three million balls less than last year. The country’s average annual annual consumption requirement in the country is estimated at least 12 million bullets. The gap is filled with imports, which constitutes a burden on the thin exchange reserves.
Economic activity remained moderate during the first quarter of this exercise, as the economy increased only 0.92%.
The famous economist in Pakistan, Dr. Hafiz Pasha, wrote this week that unemployment had reached 22% in 2023, mainly due to the negative impacts of the 2022 floods.
The IMF was informed that the industrial sector could grow 2.9% on the back of a certain growth in the manufacturing sector, the slaughter and construction sectors.
However, large -scale manufacturing remains in red and its growth can remain flat to negative. The IMF has been informed that LSM growth prospects compress both on external and internal factors, global demand and local policies preparing the path for recovery.
The service sector can grow 3.9% during this financial year and will be a key to the overall economic growth rate of 3.1%.
The sources said that the node from the briefing to the IMF was that the country would follow the way for sustainable economic policies and that hard -won stabilization will not be lost.
Inflation
The government estimated that inflation could remain from 6% to 7% during this financial year – FAR lower than the official target of 12%. One of the main reasons for less than targeted inflation is a high basic impact, a stable exchange rate and stable non -perishable food prices.
For the next exercise, the government also expects inflation to remain in the same trajectory.
Overall, the Ministry of Finance sees nominal economic growth of 11.5% during this financial year, but experts say that the number can remain in figure both because inflation and the growth rate of GDP could be lower than revised projections.
Nominal economic growth is essential for the probable objective of collecting revised FBR income, which should be revised until Rs12,48 Billion. During the first eight months, the FBR grouped RS7.34 Billions and missed the target of 606 billion rupees.
External sector
The government informed the IMF that the current account will be marginally negative during this financial year, ranging from $ 130 million to $ 500 million or 0.1% of GDP in deficit. It is much better than the low deficit last year of $ 1.7 billion.
However, the government has slowed down imports to maintain the current account on sale, as it still does not have the luxury of having a greater deficit due to the shortage of foreign currencies.
For the next fiscal year, the government has told the IMF to see the deficit near $ 3 billion or 0.7% of GDP, sources said. Sources have said that high export levels, imports, primary income and workers’ funding is the main reasons for the negligible current account deficit during this financial year.
Exports are planned at $ 33 billion for this exercise, while imports could reach $ 59 billion, the IMF was informed by the government.
The government said before the IMF that the supply -related import bill would not put significant pressure on the overall import bill, as the country has enough domestic production and strategic reserves to meet domestic demand.
For this exercise, workers’ shipments are planned in a range of 36 billion at $ 37 billion – higher than the objective and a key reason behind a balanced current account, the sources said.
