In the latest World Economic Outlook report released on Tuesday, the International Monetary Fund (IMF) predicted that Pakistan’s economic growth will stagnate further to 0.5%, with inflation surging to 27%.
Overview
This year’s prediction is a significant deterioration compared to that of 2022, when the economic growth was expected to be 6%.
The IMF further warned that the economic woes would result in a rise in unemployment rates.
The worsening conditions are a combined result of last year’s foreign reserve crisis and the devastating floods that caused the death of 1,739 people and losses worth $30 billion.
Asia GDP growth forecast, 2023
— The Spectator Index (@spectatorindex) April 12, 2023
Philippines: 6%
India: 5.9%
Vietnam: 5.8%
Bangladesh: 5.5%
China: 5.2%
Indonesia: 5%
Malaysia: 4.5%
Kazakhstan: 4.3%
UAE: 3.5%
Thailand: 3.4%
Saudi: 3.1%
Turkey: 2.7%
Iran: 2%
South Korea: 1.5%
Japan: 1.3%
Pakistan: 0.5%
Sri Lanka: -3%
(IMF)
IMF Bailout
Meanwhile, Pakistani PM Shehbaz Sharif’s government is working to secure a $1.2 billion tranche of its $6 billion IMF bailout programme to help navigate the economic crisis.
The government has cut down subsidies and increased taxes to satiate the demands of the IMF and revive the talks that have been stalled since December.
However, this has added to the pressures on the citizens, who are witnessing another hike in food, gas, and electricity prices.
IMF sticks to its guns on staff-level deal
— Shahbaz Rana (@81ShahbazRana) April 13, 2023
Pakistan emphatically requested IMF Wednesday to show some flexibility and sign staff-level agreement but it could not get a date despite Islamabad’s growing concerns about fallout of a worsening economic crisis https://t.co/I3h0f5poAw
Nevertheless, the measures are bringing Pakistan closer to securing funds from the IMF. The government said that it expects the institution to release the $1.2 billion tranche soon after discussions between Finance Minister Ishaq Dar and IMF officials.
The IMF is also more likely to release the money given that Saudi Arabia has provided assurances that it will provide Pakistan with a $2 billion loan to help it avoid defaulting on its foreign debts. Nevertheless, Islamabad is still waiting for a similar confirmation of additional loans worth $1 billion from the UAE, which will help cement its deal with the IMF.
Amid these developments, IMF’s Director for the Middle East and Central Asian Department Jihad Azour said on Wednesday that he expects a staff-level agreement with Pakistan to be finalised soon. He added that the bailout will help Pakistan recover from the economic crisis.