Finance Minister Muhammad Aurangzeb has expressed optimism that Pakistan will attain macroeconomic stability with the recently signed agreement with the International Monetary Fund (IMF). The three-year, $7 billion aid package aims to revitalize Pakistan’s struggling economy.
Aurangzeb emphasized the need for structural reforms and self-sustainability in public finance, energy, and state-owned institutions. The IMF deal, pending validation by the Executive Board, aims to cement macroeconomic stability and foster stronger, more inclusive growth.
Pakistan’s economy has faced numerous challenges, including chronic mismanagement, the COVID-19 pandemic, and supply difficulties, leading to a debt crisis and dwindling foreign currency reserves. The latest bailout follows the government’s commitment to implement reforms, including broadening the tax base.
The government aims to raise $46 billion in taxes in the upcoming fiscal year, a 40% increase from the previous year. To achieve this, the Federal Board of Revenue has blocked SIM cards of non-tax filers to widen the revenue bracket.
Pakistan initiated discussions with the IMF for its 24th bailout, aiming to support its economic reform program. The World Bank has warned that an additional 10 million Pakistanis may fall below the poverty line. Islamabad aims to reduce its fiscal deficit by 1.5% to 5.9% in the coming year.
While the current account balance has recovered slightly, high inflation is starting to decline, but Pakistan’s foreign debt remains high at $242 billion. The IMF anticipates 2% growth this year, with inflation expected to reach 25% before gradually decreasing in 2025 and 2026.
With the IMF deal, Pakistan is poised to achieve macroeconomic stability, implement structural reforms, and foster economic growth.
