IMF terms inflation as major issue in Pakistan

ISLAMABAD: The International Monetary Fund (IMF) on Wednesday termed inflation as a major issue in Pakistan and the region, ARY News reported.

Addressing a news conference Financial Counsellor and Director of the Monetary and Capital Markets Department Tobias Adrian said in Pakistan’s case, monetary policy has been tightening over the past two or three years to control inflation and inflation is projected to come down, but more work needs to be done.

He said that Pakistan is in an IMF program and there are macro challenges, which include the financial sector and central bank policies but also broader macro and fiscal issues.

Adrian stated that decrease in the losses of state institutions is imminent for stability of Pakistan’s economy.

In its latest World Economic Outlook (WEO) report released yesterday, the Washington-based global lender also projected reduction in inflation and unemployment in the country.

The IMF forecast consumer price index (CPI) at 24.8pc and 12.7pc for the current and next fiscal year, respectively. The unemployment will rate may drop to 7.5 in the next fiscal year as compared to 2024 forecast of 8.0pc, the report stated.

The International Monetary Fund (IMF) projected an acceleration in Pakistan’s economic growth for fiscal year 2025 with real GDP growth of 3.5 percent, up 0.4 percentage points from its January estimate of 3.1pc.

It is pertinent to mention here that Pakistan initiated discussions with the IMF over a new multi-billion dollar loan agreement to support its economic reform program.

The South Asian nation is nearing the end of a nine-month, $3 billion loan program with the International Monetary Fund designed to tackle a balance-of-payments crisis which brought it to the brink of default last summer.

With the final $1.1 billion tranche of that deal likely to be approved later this month, Pakistan has begun negotiations for a new multi-year IMF loan program worth “billions” of dollars, Finance Minister Muhammad Aurangzeb said during an interview in Washington.

“The market confidence, the market sentiment is in much, much better shape this fiscal year,” said Aurangzeb, a former banker who took up his post last month.

“It’s really for that purpose that, during the course of this week, we have initiated the discussion with the Fund to get into a larger and an extended program,” he added.