From Zeeshan Mirza
KARACHI: A recent report by Fitch Ratings anticipated that the inflation rate of Pakistan will stabilize around 12 percent.
The report suggests that the State Bank of Pakistan may lower interest rates to 16 percent by fiscal year 2025, potentially providing some relief to borrowers.
The budget for the next fiscal year is poised to be a cornerstone of Pakistan’s economic strategy, aimed at fortifying its agreement with the International Monetary Fund (IMF).
According to Fitch report, maintaining economic discipline within the budget framework will be crucial for reducing the fiscal deficit, a long-standing issue for the country.
Economic growth remains a point of concern, Fitch projects that the growth rate may fall short of the government’s target of 3 percent.
Despite this, there are signs of recovery, with economic activity picking up momentum since the February elections.
The narrowing of the current account deficit to 0.3 percent has been a bright spot, largely driven by robust agricultural exports.
This improvement in the external balance is crucial for Pakistan as it braces for substantial foreign payments obligations.
Fitch estimates that Pakistan will require around $20 billion for foreign payments in the next fiscal year.
The report also suggests that some of the country’s debts may be rolled over in the upcoming budget.
The overall Fitch report highlights some positive trends in Pakistan’s economic performance, it also underscores the challenges ahead.
