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Business Recorder
19-05-2025
- Business
- Business Recorder
IMF lowers GDP growth forecast to 2.6% for Pakistan
ISLAMABAD: The International Monetary Fund (IMF) has revised downward GDP growth for Pakistan to 2.6 percent for the outgoing fiscal year 2024-25 from the October projection of 3.2 percent, based on the weaker activity in first half (H1) and broader global uncertainty. The Fund in its latest report 'First review under the Extended Fund Facility (EFF) arrangement, requests for modification of performance criteria, and request for an arrangement under the Resilience and Sustainable Facility (RSF)', noted;2.5 percent GDP growth in fiscal year 2024, growth slowed somewhat in H1, recording 1.3 percent and 1.7 percent (yoy) in fiscal year Q1 and Q2, respectively, reflecting lower yields from the major Kharif crops and still-subdued industrial activity. Current expenditure was as per the Fund program 18.9 percent of GDP while current projection is the same (even though the growth has been downgraded from the program projection) though for next year the projection is 17.8 percent however the realization of this would depend on achieving the projected growth rate of 3.6 percent. IMF lowers Pakistan's FY25 GDP growth forecast to 2.6% Public Sector Development Program was under the Fund program this year projected at 2.3 percent of GDP while the projection is now 2.5 percent however disbursements by the Planning Ministry do not lend credence to this upgrade. Defence was budgeted and disbursed 1.7 percent of GDP while for next fiscal year it is projected at 1.9 percent of GDP. Privatisation proceeds are budgeted at zero percent of GDP for the current year and for the next four years by the Fund. Output of major crops was disappointing in H1 and industrial activity has remained subdued, but based on recent high frequency indicators projected an acceleration in fiscal year 2025 H2 and thereafter. The Fund stated that inflation fell to 0.7 percent (yoy) in March driven by tight macro policies and, principally, lower food and energy prices. However, core inflation is still elevated at around 9 percent. For the outgoing fiscal year 2025 inflation is revised down, although it is projected to increase notably in the coming months due to adverse base effects, with a durable return to the target range (5–7 percent) expected during fiscal year 2026, provided policy remains appropriately tight. The current account deficit (CAD) for fiscal year 2025 is projected at about $0.2 billion (0.1 percent of GDP), helped by resilient exports and a stronger remittance outlook, as improved macro and FX stability has supported a rebound in remittance inflows through formal channels. Over the medium term, the CAD is expected to widen modestly to around 1 percent of GDP as imports rebound. Gross (net reserves were not specified) international reserves are expected to continue to strengthen, supported by financing committed by multilateral and bilateral creditors, as well as prospective RSF disbursements ($1.3 billion). Access to external commercial financing is expected to remain limited during the program, with a small 'Panda' bond issuance anticipated in fiscal year 2026, ahead of a gradual return to the Eurobond/Global Sukuk market assumed in fiscal year 2027, reflecting a restoration of policy credibility. The Fund has also lowered the exports projection to $31.305 billion for the outgoing fiscal year 2024-25 against the programmed $31.751 billion. Imports are projected to increase to $57.634 billion in the current fiscal year 2024-25 compared to the programmed $57.180 billion. Copyright Business Recorder, 2025
Business Recorder
19-05-2025
- Business
- Business Recorder
IMF lowers GDP growth forecast to 2.6pc for Pakistan
ISLAMABAD: The International Monetary Fund (IMF) has revised downward GDP growth for Pakistan to 2.6 percent for the outgoing fiscal year 2024-25 from the October projection of 3.2 percent, based on the weaker activity in first half (H1) and broader global uncertainty. The Fund in its latest report 'First review under the Extended Fund Facility (EFF) arrangement, requests for modification of performance criteria, and request for an arrangement under the Resilience and Sustainable Facility (RSF)', noted;2.5 percent GDP growth in fiscal year 2024, growth slowed somewhat in H1, recording 1.3 percent and 1.7 percent (yoy) in fiscal year Q1 and Q2, respectively, reflecting lower yields from the major Kharif crops and still-subdued industrial activity. Current expenditure was as per the Fund program 18.9 percent of GDP while current projection is the same (even though the growth has been downgraded from the program projection) though for next year the projection is 17.8 percent however the realization of this would depend on achieving the projected growth rate of 3.6 percent. IMF lowers Pakistan's FY25 GDP growth forecast to 2.6% Public Sector Development Program was under the Fund program this year projected at 2.3 percent of GDP while the projection is now 2.5 percent however disbursements by the Planning Ministry do not lend credence to this upgrade. Defence was budgeted and disbursed 1.7 percent of GDP while for next fiscal year it is projected at 1.9 percent of GDP. Privatisation proceeds are budgeted at zero percent of GDP for the current year and for the next four years by the Fund. Output of major crops was disappointing in H1 and industrial activity has remained subdued, but based on recent high frequency indicators projected an acceleration in fiscal year 2025 H2 and thereafter. The Fund stated that inflation fell to 0.7 percent (yoy) in March driven by tight macro policies and, principally, lower food and energy prices. However, core inflation is still elevated at around 9 percent. For the outgoing fiscal year 2025 inflation is revised down, although it is projected to increase notably in the coming months due to adverse base effects, with a durable return to the target range (5–7 percent) expected during fiscal year 2026, provided policy remains appropriately tight. The current account deficit (CAD) for fiscal year 2025 is projected at about $0.2 billion (0.1 percent of GDP), helped by resilient exports and a stronger remittance outlook, as improved macro and FX stability has supported a rebound in remittance inflows through formal channels. Over the medium term, the CAD is expected to widen modestly to around 1 percent of GDP as imports rebound. Gross (net reserves were not specified) international reserves are expected to continue to strengthen, supported by financing committed by multilateral and bilateral creditors, as well as prospective RSF disbursements ($1.3 billion). Access to external commercial financing is expected to remain limited during the program, with a small 'Panda' bond issuance anticipated in fiscal year 2026, ahead of a gradual return to the Eurobond/Global Sukuk market assumed in fiscal year 2027, reflecting a restoration of policy credibility. The Fund has also lowered the exports projection to $31.305 billion for the outgoing fiscal year 2024-25 against the programmed $31.751 billion. Imports are projected to increase to $57.634 billion in the current fiscal year 2024-25 compared to the programmed $57.180 billion. Copyright Business Recorder, 2025
Business Recorder
19-05-2025
- Business
- Business Recorder
IMF lowers GDP growth forecast to 2.6pc
ISLAMABAD: The International Monetary Fund (IMF) has revised downward the GDP growth for Pakistan to 2.6 percent for the outgoing fiscal year 2024-25 from the October projection of 3.2 percent, based on the weaker activity in first half (H1) and broader global uncertainty. The Fund in its latest report 'First review under the Extended Fund Facility (EFF) arrangement, requests for modification of performance criteria, and request for an arrangement under the Resilience and Sustainable Facility (RSF)', noted;2.5 percent GDP growth in fiscal year 2024, growth slowed somewhat in H1, recording 1.3 percent and 1.7 percent (yoy) in fiscal year Q1 and Q2, respectively, reflecting lower yields from the major Kharif crops and still-subdued industrial activity. Current expenditure was as per the Fund program 18.9 percent of GDP while current projection is the same (even though the growth has been downgraded from the program projection) though for next year the projection is 17.8 percent however the realization of this would depend on achieving the projected growth rate of 3.6 percent. IMF lowers Pakistan's FY25 GDP growth forecast to 2.6% Public Sector Development Program was under the Fund program this year projected at 2.3 percent of GDP while the projection is now 2.5 percent however disbursements by the Planning Ministry do not lend credence to this upgrade. Defence was budgeted and disbursed 1.7 percent of GDP while for next fiscal year it is projected at 1.9 percent of GDP. Privatisation proceeds are budgeted at zero percent of GDP for the current year and for the next four years by the Fund. Output of major crops was disappointing in H1 and industrial activity has remained subdued, but based on recent high frequency indicators projected an acceleration in fiscal year 2025 H2 and thereafter. The Fund stated that inflation fell to 0.7 percent (yoy) in March driven by tight macro policies and, principally, lower food and energy prices. However, core inflation is still elevated at around 9 percent. For the outgoing fiscal year 2025 inflation is revised down, although it is projected to increase notably in the coming months due to adverse base effects, with a durable return to the target range (5–7 percent) expected during fiscal year 2026, provided policy remains appropriately tight. The current account deficit (CAD) for fiscal year 2025 is projected at about $0.2 billion (0.1 percent of GDP), helped by resilient exports and a stronger remittance outlook, as improved macro and FX stability has supported a rebound in remittance inflows through formal channels. Over the medium term, the CAD is expected to widen modestly to around 1 percent of GDP as imports rebound. Gross (net reserves were not specified) international reserves are expected to continue to strengthen, supported by financing committed by multilateral and bilateral creditors, as well as prospective RSF disbursements ($1.3 billion). Access to external commercial financing is expected to remain limited during the program, with a small 'Panda' bond issuance anticipated in fiscal year 2026, ahead of a gradual return to the Eurobond/Global Sukuk market assumed in fiscal year 2027, reflecting a restoration of policy credibility. The Fund has also lowered the exports projection to $31.305 billion for the outgoing fiscal year 2024-25 against the programmed $31.751 billion. Imports are projected to increase to $57.634 billion in the current fiscal year 2024-25 compared to the programmed $57.180 billion. Copyright Business Recorder, 2025
Business Recorder
18-05-2025
- Business
- Business Recorder
Pakistan meets all 7 QPCs, 5 of 8 ITs and SBs: IMF says policy efforts continue to bear fruit
ISLAMABAD: Pakistan has met all seven quantitative performance criteria (QPCs) and five of eight Indicative Targets (ITs) at end-December, while most continuous and other Structural Benchmarks (SBs) were met, set under the Extended Fund Facility (EFF) programme, says International Monetary Fund (IMF). The IMF in its report 'First review under EFF, request for modification of performance criteria and request for an arrangement under the Resilience and Sustainable Facility', stated continued strong and timely implementation of EFF programme remains critical for Pakistan to safeguard recent hard-won economic stability and support sustainable growth. The 37-month EFF programme, approved on September 25, 2024, is on track, the Fund added. The Fund stated that Pakistani authorities' policy efforts have continued to bear fruit. Financial and external conditions have continued to improve, with a current account surplus in the first eight months of FY 2025 and reserves exceeding program projections. Inflation has recently declined to historical lows, although core inflation remains elevated at around 9 percent. The economic recovery is continuing, although growth in FY 2025 H1 was somewhat lower than anticipated. Federal Budget: Aurangzeb holds virtual consultations with IMF The FY 2025 primary surplus target is on track, but further fiscal reforms are necessary to strengthen revenue mobilization and reduce debt, while creating space for social and development spending. Monetary policy should remain tight and data dependent to ensure that inflation stays moderate, within the SBP's target range. A more flexible exchange rate remains critical to absorb shocks and support the rebuilding of reserves. Efforts to ensure energy sector cost recovery via timely tariff adjustments remain necessary supported by broader reforms to restore viability and reduce the sector's high costs. Structural reforms to improve governance and the trade and investment environment need to deepen, to support stronger sustainable and inclusive growth. The Fund further stated that the proposed arrangement under the Resilience and Sustainability Facility (RSF), with access set at 49.2 percent of quota (equivalent to SDR 1 billion), aims to reduce Pakistan's balance of payments stability risks stemming from climate vulnerabilities. Reform Measures (RMs) aim to: (i) prioritize resilience to natural disasters and strengthen public investment processes at all levels of government; (ii) make the use of scarce water resources more efficient, including through better pricing; (iii) strengthen coordination of natural disaster response and financing between federal and provincial governments; (iv) improve the information architecture, for and disclosure of, climate-related risks by banks and corporates; and (v) support Pakistan's efforts to meet its mitigation commitments and reduce related macro-critical risks. Copyright Business Recorder, 2025
Business Recorder
08-05-2025
- Business
- Business Recorder
IMF reaffirms support for Pakistan's bailout, calls for deesclation with India
The International Monetary Fund (IMF) on Thursday reiterated that its Executive Board meeting pertaining to Pakistan's bailout programme will proceed as planned on May 9, 2025. 'As has been announced, the Board meeting for the first EFF [Extended Fund Facility] review and RSF [Resilience and Sustainable Facility] is scheduled for May 9,' said IMF spokesperson, in a statement provided to Business Recorder. 'The IMF supports Pakistan's economic program through its EFF, which is specifically designed to build reserves and help reforms aligned with the objectives of the EFF, which are to restore macroeconomic policy credibility, build resilience including through stronger buffers, and create stronger inclusive growth,' the lender said. The comments come as the heaviest fighting in more than two decades has erupted between the two nuclear-armed neighbours, with shelling and gunfire over the frontier in Kashmir and India striking targets inside Pakistan. At least 31 Pakistanis were martyred and dozens were injured in Indian missile attacks inside Pakistan, DG ISPR said on Wednesday. In retaliation, the Pakistan military brought down five Indian Air Force jets, including three Rafale, one MiG-21, and one SU-30, following Indian missile attacks. In its statement, the IMF stated: 'We hope for a peaceful resolution and de-escalation between the two parties'. Last month, the IMF staff reached a deal with Pakistan for a new $1.3 billion arrangement and also agreed on the first review of the ongoing 37-month bailout programme. Pending the IMF's Executive Board approval, Islamabad can unlock the $1.3 billion under a new climate resilience loan programme spanning 28 months. It will also free $1 billion for Pakistan under the $7 billion bailout programme, which would bring those disbursements to $2 billion. The programme is critical to the $350 billion economy, and Pakistan said it has stabilised under the bailout that helped it stave off a default threat.
