- Says that inflation has fallen to single digits, that policy rates have fallen.
- Highlights, foreign exchange reserves cover well for 2.5 months of imports.
- All 3 credit rating agencies have upgraded Pakistan’s credit outlook.
Pakistan expects its economy to grow by 3.5% this fiscal year despite flood-related setbacks, Finance Minister Muhammad Aurangzeb said in an interview with CGTN America’s talk show ‘Heat’, citing improved stability, lower inflation and stronger foreign exchange reserves.
Aurangzeb said the current government’s economic measures were bearing fruit as inflation was in double digits and the central bank’s monetary stance was dovish. “Our foreign exchange reserves are sufficient to cover two and a half months of imports,” the finance czar said.
Economic performance has drawn international recognition as all three major global rating agencies recently upgraded the country’s credit outlook, according to the finance minister.
The minister said Pakistan’s gross domestic product (GDP) grew by 3% in the last fiscal year and economic fundamentals continued to strengthen.
“The target for growth this year was set at above 4%, although it may be slightly affected by the recent floods,” the finance minister said.
Aurangzeb also pointed to progress in the second phase of the China-Pakistan Economic Corridor (CPEC) and said 24 joint projects were recently signed in Beijing. “New investment opportunities are also under consideration,” he added.
Pakistan and the International Monetary Fund (IMF) reached a staff-level agreement on a loan program that would give the country access to $1.2 billion, subject to approval by the fund’s board.
The IMF will provide Pakistan $1 billion under its Extended Fund Facility and $200 million under its Resilience and Sustainability Facility, bringing total disbursements under the two arrangements to about $3.3 billion.
Countries under the IMF’s lending programs must undergo regular reviews, which, when signed off by the fund’s executive board, trigger disbursements of loan tranches.
“Supported by the EFF, Pakistan’s economic program strengthens macroeconomic stability and rebuilds market confidence,” the foundation said in a statement.
The IMF said the South Asian nation’s recovery remains on track, with inflation remaining contained, external buffers strengthening and financial conditions improving as sovereign spreads narrow significantly.
Pakistan has also pledged to maintain an appropriately tight and data-driven monetary policy and strengthen climate resilience in the wake of recent devastating floods.
Aurangzeb had said earlier this month that the country was set to sign an interim agreement with the IMF after an IMF team left Pakistan last week without reaching agreements.
In an interview, he said the government now plans to return to capital markets, starting with its first green bond denominated in Chinese yuan before the end of the year, followed by an international bond of at least $1 billion.
The IMF’s support in September 2024 helped bolster Pakistan’s $370 billion economy after a severe economic crisis sent the country’s currency tumbling.
—Additional input from Reuters
