Islamabad: On Wednesday, the International Monetary Fund released the economic outlook for the Middle East & Central Asian region. The outlook described the economic situation across different parts of the world and highlighted the depleting condition of Pakistan’s economy. The global money lender believed that Pakistan has to hike the interest rate to stabilise inflation.
According to the economic outlook report, Pakistan, Tunisia & Egypt have experienced an increase in inflation. As far as jacking up the interest rates is concerned, the State Bank of Pakistan hiked the rate to 21 per cent. However, the step did not control inflation. The rate jumped to 36.4 per cent in April. Meanwhile, the debt servicing cost of government got elevated to Rs5.3 trillion (against the budget of Rs3.95 trillion) due to a surge in interest rates.
Trade Deficit & Foreign Exchange Reserves
The regional economic outlook report stated that during the next fiscal year, the trade deficit would reach $37.4 billion in services & goods. During the next fiscal year, the exports of services & goods had been projected to be $40 billion.
The report projected that gross foreign exchange reserves would stand at $11.7 billion. It further added that Egypt and Pakistan witnessed depreciations in October 2022 and pressure remained constant at international reserves & exchange rates.
Growth Rate & Inflation in Pakistan
IMF said that the growth rate would fluctuate around 3.5 per cent in Pakistan during 2024. On the other hand, the inflation rate would reach 27 per cent during the current year.
The report projected that current account deficit (CAD) of Pakistan would stand at 2.4 per cent of GDP. It also said that Pakistan would miss the targets of fiscal & debt reduction. The budget deficit would peak at 8.3 per cent of Pakistan’s economy in the next fiscal year.
