ISLAMABAD (Kashmir English): The IMF has emphasized maintaining a market-based exchange rate and proposed keeping interest rates high to curb inflation in Economic review talks with Pakistan.
Pakistan’s economic team has briefed the IMF mission on projections regarding domestic economic indicators during several meetings.
According to the briefing, Pakistan’s economic outlook is stable. The rupee is steady, and inflation is expected to decline.
The current account deficit is likely to remain below the target, and the government intends to maintain its economic growth target of 4 percent. The economic outlook remains unaffected by the conflict in the Middle East.
However, differences persist between the IMF and Pakistan regarding the exchange rate and interest rates; the IMF maintains that interest rates must remain high to control inflation.
During the meetings held so far, the IMF was informed that exports are projected to reach $34 billion and remittances $45.5 billion in the current fiscal year.
Imports are estimated to range between $69 billion and $70 billion, while the current account deficit is expected to be between $2.5 billion and $3 billion.
While the IMF advocates for high interest rates to curb inflation, Pakistani officials anticipate a gradual decline in inflation after December.
If global oil prices remain at $80 per barrel, inflation could reach 7.5 percent; if they rise to $100 per barrel, it could reach 8.2 percent. The stability of the rupee will help mitigate imported inflation. According to the briefing, foreign exchange reserves are expected to keep the external sector stable.
Remittances rose by 14.7 percent during the first two months. Domestic food production is expected to contain the import bill.
Despite the Middle East conflict, the economic growth target of 4 percent remains intact; however, high oil prices and supply disruptions pose economic risks.
