The International Monetary Fund (IMF) has forecasted a recovery in the economic condition of Pakistan in fiscal year 2024.

“Macroeconomic conditions have generally improved, with growth of 2% expected in FY24 as the nascent recovery expands in the second half of the year. The fiscal position also strengthened in the first quarter of FY24 achieving a primary surplus of 0.4% of GDP driven by overall strong revenues,” the IMF said in a press release on Jan 11.

A day earlier, the IMF Executive Board approved a $700 million tranche for Pakistan. With the announcement of this approval, the lending institution issued a release of economic indicators for Pakistan.

While inflation remained elevated in the country, the lending institution expected it to decline to 18.5% by end-June 2024. The unemployment in the country is also likely to fall to 8% in 2024 as compared with 8.5% in 2023.

However, the current account deficit is expected to rise to around 1.5% of GDP in FY24 as the recovery takes hold.

“Assuming sustained sound macroeconomic policy and structural reform implementation, inflation should return to the State Bank of Pakistan target and growth to continue to strengthen over the medium term,” as per the IMF.

Antoinette Sayeh, Deputy Managing Director and Chair said that Pakistan’s programme performance under the Stand-By Arrangement has supported significant progress in stabilising the economy following significant shocks in FY2022-23.

“There are now tentative signs of activity picking-up and external pressures easing. Continued strong ownership remains critical to ensure the current momentum continues and stabilization of Pakistan’s economy becomes entrenched,” she added.

Sayeh acknowledged the steps the authorities took to bring both electricity and natural gas prices closer to costs in 2023.

She urged the SBP to maintain a tight stance to ensure that inflation returns to more moderate levels.

“Pakistan also needs a market-determined exchange rate to buffer external shocks, continue rebuilding foreign reserves, and support competitiveness and growth,” she said.