Pakistan’s economic growth continues at a steady pace

World Saturday 23/March/2024 17:51 PM
By: Agencies
Pakistan’s economic growth continues at a steady pace

Islamabad: The economic recovery in Pakistan continues at a steady pace, bolstering business confidence and market sentiment, Pakistan’s Ministry of Finance said.

“Despite significant challenges, the overall economic outlook is optimistic, marked by receding inflationary pressures, positive prospects in agriculture, signs of potential recovery in the industrial sector reflected by positive trends in high-frequency indicators, imports, and a favorable external environment,” the ministry said in its monthly economic outlook report.

The optimistic economic outlook is also evident by the 2.13 percent gross domestic product (GDP) growth achieved in the first quarter of the fiscal year (starting from July 2023 to June 2024), largely contributed by agriculture and industry, said the report. The fiscal as well as current account deficit is on a downward trajectory, which signifies better economic management to reduce the macroeconomic imbalances, it added.

“This lays the foundation for progressing towards higher and sustainable economic growth,” the report said, adding that “it is expected that this positive momentum will further strengthen in the upcoming months.”

The International Monetary Fund (IMF) has reached a staff-level agreement with Pakistan on the final review of a USD 3 billion bailout, paving the way for the nation to receive the last tranche of USD 1.1 billion after approval from the Fund’s Executive Board, reported Dawn.

The funds are the final tranche of a USD 3 billion rescue package that Pakistan secured last summer, which averted a sovereign debt default. Reportedly, Islamabad is also seeking another long-term bailout.

“The agreement recognises the strong programme implementation by the State Bank of Pakistan and the caretaker government in recent months, as well as the new government’s intentions for ongoing policy and reform efforts to move Pakistan from stabilisation to a strong and sustainable recovery,” the Fund said in a statement.

“Given the timing of the Second Review mission, immediately following the formation of the new cabinet, we expect the review to be considered by the IMF’s Board in late April,” it added.

Nathan Porter, the IMF mission chief in Pakistan, said in a statement that Pakistan’s economic and financial position has improved in the months since the first review.

“Pakistan’s economic and financial position has improved in the months since the first review, with growth and confidence continuing to recover on the back of prudent policy management and the resumption of inflows from multilateral and bilateral partners,” Porter stated.

The statement added that the current government will continue its “efforts towards broadening the tax base, and continue with the timely implementation of power and gas tariff adjustments to keep average tariffs consistent with cost recovery while protecting the vulnerable through the existing progressive tariff structures, thus avoiding any net circular debt accumulation.”

It further emphasised that the central bank remained “committed to maintaining a prudent monetary policy to lower inflation and ensure exchange rate flexibility.”
Following the statement, shares at the Pakistan Stock Exchange (PSX) climbed by 374 points.

Earlier, Finance Minister Muhammad Aurangzeb and the IMF mission chief in Pakistan, Nathan Porter, led their respective teams at the final customary concluding session.