- He says inflation has fallen to single digits and official rates have fallen.
- The highlight is that foreign exchange reserves cover 2.5 months of imports.
- All three rating agencies have upgraded Pakistan’s credit outlook.
Pakistan expects its economy to grow 3.5% this fiscal year despite flood-related setbacks, Finance Minister Muhammad Aurangzeb said in an interview with CGTN America talk show ‘Heat’, citing greater stability, lower inflation and higher foreign exchange reserves.
Aurangzeb said the current government’s economic measures were bearing fruit as inflation was in single digits and the central bank’s monetary stance was dovish. “Our foreign exchange reserves are enough to cover two and a half months of imports,” said the finance czar.
The economic performance has attracted international recognition, with all three major global rating agencies recently upgrading 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 growth target for this year was set at more than 4%, although it may be slightly affected by the recent floods,” said the Finance Minister.
Aurangzeb also highlighted the progress in the second phase of the China-Pakistan Economic Corridor (CPEC), saying that 24 joint projects were signed in Beijing recently. “New investment opportunities are also being considered,” he added.
Pakistan and the International Monetary Fund (IMF) have reached a staff-level agreement on a loan programme, which would allow the country to access $1.2 billion upon approval by the fund’s board.
The IMF will provide Pakistan with $1 billion under its Extended Fund Facility and $200 million under its Resilience and Sustainability Facility, bringing total disbursements under the two agreements to about $3.3 billion.
Countries under IMF loan programs must pass periodic reviews that, once approved by the fund’s executive board, trigger payments on the loan tranche.
“With the support of the EFF, Pakistan’s economic program is strengthening macroeconomic stability and rebuilding market confidence,” the fund said in a statement.
The IMF said the South Asian nation’s recovery remains on track, with inflation contained, external reserves strengthening and financial conditions improving as sovereign spreads narrowed significantly.
Pakistan has also committed to maintaining an appropriately tight and data-driven monetary policy and strengthening climate resilience following the recent devastating floods.
Aurangzeb had said earlier this month that the country was ready to sign a preliminary agreement with the IMF, after an IMF team left Pakistan last week without sealing agreements.
In an interview, he said the government now plans to return to capital markets, starting with its first Chinese yuan-denominated green bond before the end of the year, followed by at least a billion-dollar international bond.
IMF support in September 2024 helped shore up Pakistan’s $370 billion economy after a severe economic crisis that sent its currency tumbling.
—Additional contributions from Reuters
