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Friday, May 17, 2024

Pakistan’s Economic Outlook: IMF Deal in Sight

Finance Minister Muhammad Aurangzeb expresses confidence in securing a new IMF deal, highlighting positive shifts in Pakistan's macroeconomic indicators, including currency stability and declining inflation.

Finance Minister Muhammad Aurangzeb has expressed optimism regarding Pakistan’s economic trajectory, highlighting the country’s progress in stabilizing macroeconomic indicators.

In an interview with The National, Aurangzeb emphasized the improved currency stability and projected a significant decrease in inflation, aiming for single-digit levels by the end of next year. These positive shifts come amidst discussions to secure a new and larger loan agreement with the International Monetary Fund (IMF), signaling potential support for Pakistan’s reform agenda.

Confidence in IMF Deal and Macroeconomic Stability

Aurangzeb’s confidence in securing a new IMF loan stems from constructive discussions with the IMF managing director and senior team. He anticipates the IMF’s receptiveness to consider a larger and longer program, emphasizing Pakistan’s successful completion of the current Stand-By Arrangement (SBA).

With Pakistan’s $3 billion SBA set to conclude in late April, the government aims to negotiate a more substantial loan to bolster macroeconomic stability and facilitate economic reforms across various sectors, including taxation and energy.

Remittance Growth and Economic Resilience

Despite concerns over a potential decline in remittances, Aurangzeb remains optimistic, forecasting an increase to $29 billion compared to the previous year’s $28 billion. This resilience in remittance inflows reflects Pakistan’s economic resilience amidst global challenges.

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Furthermore, Aurangzeb underscores the stability of the Pakistani Rupee (PKR), expecting a modest depreciation of six to eight percent annually. Amidst these economic developments, the finance minister emphasizes the importance of strengthening the technology sector, highlighting its significant growth potential in contributing to the economy.

CPEC Revitalization and Development Partnerships

Aurangzeb acknowledges Pakistan‘s need to expedite the implementation of China-Pakistan Economic Corridor (CPEC) projects to capitalize on their revenue-generating potential. Recognizing past delays, the government is committed to advancing CPEC’s second phase to maximize economic benefits.

Additionally, Aurangzeb underscores the significance of partnerships with international financial institutions like the World Bank and International Finance Corporation (IFC) in promoting economic growth and financial stability. These collaborative efforts aim to create an enabling environment for private-sector investment while ensuring transparency and accountability in financial matters, aligning with Pakistan’s broader development agenda.