IMF’s staff report paints an optimistic picture for Pakistan’s economy

July 9, 2019 (MLN): The International Monetary Fund released a staff report on Monday in response to Pakistan’s request for an extended arrangement under the extended fund facility. The comprehensive report covers a wide arena of challenges and future projections pertaining to Pakistan’s economy.

Along with providing a detailed background of the of the US $6 billion 39-Month Extended Fund Facility Arrangement for Pakistan, the report has placed its focus largely on the implications and future projections of significant economic indicators.

Speaking of the few important ones, IMF has projected the real GDP growth to stand at 2.4% by the end of current fiscal year, and expects the same to touch 5% by FY2023. This highly optimistic picture has also been painted for CPI inflation, which is expected to fall from 13% in FY20 to 5% in FY2023.

With regards to current account deficit, IMF has proposed a figure of $6.7 billion in FY20 and $5.5 in upcoming fiscal year, suggesting a reduction in deficit by around 18%. However, the figure for FY24 has been estimated at $6.1 billion, suggesting an increase in deficit in coming years.

While imports are expected to observe a rising trend as usual, the same has also been anticipated for exports which are expected to increase from $26.8 billion in FY20 to $36.6 billion in FY24.

As per the report, the country would also be witnessing a growth in workers’ remittances from $22.5 billion in FY20 to $27.03 in FY24. On the other hand, the foreign direct investment in Pakistan has been projected at $2.1 billion in FY20.

While the report offered no projections regarding the exchange rate, it however maintained that a flexible market-determined exchange rate will modernize the foreign exchange rate regime and the functioning of financial markets, and contribute to a better allocation of resources in the economy.

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