The International Monetary Fund (IMF) is scheduled to send its review mission to Pakistan on September 25 to assess the country’s progress under its $7 billion Extended Fund Facility (EFF) program.
The review is a key milestone in Pakistan’s engagement with the IMF, as its successful completion will allow for the disbursement of the next $1 billion tranche. Pakistan has already received over $2.1 billion in two installments under the EFF, with the next tranche awaiting IMF Board approval following the review.
In the aftermath of the devastating floods, Pakistan’s macroeconomic framework may require downward adjustments, including revising the real GDP growth rate, inflation projections, monetary policy, and trade figures for the current fiscal year.
Reports suggest that the GDP growth forecast, originally set at 4.2%, will likely be lowered due to severe damage to the agriculture sector, with further inflationary pressures expected from disrupted food supply chains.
CPI-based inflation is also anticipated to exceed the earlier target of 5-7% for FY25, driven by increased food prices. The export sector, particularly rice, may face a downturn, while imports are expected to rise significantly, mainly due to flood-related agricultural damage. The trade deficit, which had already been widening, is set to increase further.
The IMF will also scrutinise the implementation of the Agriculture Income Tax (AIT), seeking details on its potential as a revenue generator.
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