The International Monetary Fund (IMF) has projected that Pakistan’s GDP will grow by 3.2% in the fiscal year 2025, which is higher than the 2.4% recorded in the last fiscal year. This projection surpasses the Asian Development Bank’s (ADB) expectation of a moderate 2.8% growth in the ongoing fiscal year.
In its report, the IMF noted that inflation in Pakistan has significantly decreased due to appropriate fiscal and monetary policies. The country’s current account and foreign currency market have remained stable, allowing for the rebuilding of reserve buffers.
The IMF expects the inflation rate to decelerate to 9.2% in FY25, a significant decrease from 23.4% in FY24. Additionally, Pakistan’s current account deficit is projected to rise to 0.9% of GDP in FY25, compared to 0.2% in FY24. The unemployment rate is also expected to decrease from 8% to 7.5% by June 2025.
Despite these positive developments, the IMF highlighted that Pakistan still faces significant vulnerabilities and structural challenges.
The IMF anticipates a considerable improvement in Pakistan’s foreign exchange reserve position, projecting it to reach $12.757 billion by June 2025, up from $9.38 billion in FY24.
These projections come after the IMF Executive Board approved a 37-month, $7-billion Extended Fund Facility for Pakistan. Following the approval, the State Bank of Pakistan (SBP) received the first tranche of Special Drawing Rights (SDR) 760 million, equivalent to $1.03 billion, from the IMF. These inflows will be reflected in SBP’s reserve data to be released on October 3, 2024.
The Pakistani authorities and the IMF team reached a staff-level agreement on the Extended Fund Facility (EFF) in the amount equivalent to SDR 5,320 million (or about USD 7 billion) on July 12.
