Pakistan expects its economy to grow by 3.5% this fiscal year despite flood-related setbacks, Finance Minister Muhammad Aurangzeb said in an interview with CGTN America’s talk show ‘Heat’, citing improved stability, lower inflation, and stronger foreign exchange reserves.
Aurangzeb said the current government’s economic measures were bearing fruit, as inflation was in single digits, and the central bank’s monetary stance was dovish. “Our foreign exchange reserves are sufficient to cover two and a half months of imports,” the finance czar said.
Economic performance has drawn international recognition, as all three major global rating agencies recently upgraded the country’s credit outlook, according to the finance minister.
The minister said Pakistan’s gross domestic product (GDP) grew by 3% in the last fiscal year and that economic fundamentals continued to strengthen.
“The target for growth this year was set at over 4%, though it may be slightly affected by the recent floods,” the finance minister said.
Aurangzeb also pointed to progress in the second phase of the China-Pakistan Economic Corridor (CPEC), saying 24 joint projects were recently signed in Beijing. “New investment opportunities are also under consideration,” he added.
Pakistan and the International Monetary Fund (IMF) reached a staff-level agreement on a loan programme, which would allow the country to access $1.2 billion after approval from the fund’s board.
The IMF will provide Pakistan $1 billion under its Extended Fund Facility and $200 million under its Resilience and Sustainability Facility, bringing total disbursements under the two arrangements to about $3.3 billion.
Countries under IMF lending programmes need to pass regular reviews, which, once signed off by the fund’s executive board, trigger loan tranche payments.
“Supported by the EFF, Pakistan’s economic programme is entrenching macroeconomic stability and rebuilding market confidence,” the fund said in a statement.
The IMF said the South Asian nation’s recovery remains on track, with inflation remaining contained, external buffers strengthening, and financial conditions improving as sovereign spreads narrowed significantly.
Pakistan has also pledged to maintain an appropriately tight and data-dependent monetary policy and strengthen climate resilience in the wake of recent devastating floods.
Aurangzeb had said earlier this month that the country was set to sign a preliminary deal with the IMF, after an IMF team left Pakistan last week without sealing agreements.
In an interview, he said the government now plans to return to capital markets, starting with its first green bond denominated in Chinese yuan before the end of the year, followed by at least a $1 billion international bond.
The IMF’s support in September 2024 helped shore up Pakistan’s $370 billion economy following a severe economic crisis that sent its currency tumbling.
