IMF Report Highlights Pakistan’s Economic Recovery, Calls for Continued Reforms

The International Monetary Fund (IMF) has projected a positive shift in Pakistan’s economic outlook following the approval of a $7 billion loan package.

In its latest report, the IMF forecasted improved economic growth, reduced inflation, and lower unemployment. However, the Fund emphasized that Pakistan’s economy still faces significant challenges, necessitating comprehensive reforms.

According to the report, Pakistan’s GDP growth is expected to increase to 3.2% in the current fiscal year, up from 2.4% last year. Inflation is projected to drop sharply, with the average rate declining from 23.4% to 9.5%. Unemployment is also expected to fall slightly, from 8% to 7.5%.

Despite these encouraging projections, the IMF expressed concerns over Pakistan’s budget deficit, which could decrease to 6.1% of GDP from last year’s 6.8%. However, government debt, including IMF loans, is expected to rise, with the debt-to-GDP ratio increasing from 69.2% to 71.4%.

Pakistan’s foreign exchange reserves are anticipated to improve, reaching $12.75 billion by the fiscal year’s end, offering some relief to the country’s external sector. The IMF emphasized that reforms in the energy sector and fiscal management are essential for maintaining long-term economic growth.

Kenji Okamura, IMF Deputy Managing Director and Acting President, stressed the importance of expanding the tax base, particularly targeting industrialists, developers, and large landowners with low tax burdens. He called for eliminating special tax exemptions and incorporating all sectors, including agriculture, into the tax net.

Okamura also highlighted the need for improved governance, anti-corruption measures, and effective public investment management. He underscored the importance of continuing energy sector reforms and maintaining a tight monetary policy to ensure financial stability.

The report recognized last year’s policies as key to stabilizing Pakistan’s economy, restoring growth, and easing external pressures but warned that sustained efforts are required to maintain this progress.

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The IMF concluded that long-term economic growth will depend on careful spending, improved revenue collection, and institutional reforms. This approach will generate the resources needed for investing in infrastructure, social programs, and human capital, ensuring Pakistan’s future economic stability and prosperity.

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