IMF Predictions

Based on the IMF’s quarterly review of Pakistan’s macroeco­nomic position under the $3 billion SBA, the IMF has predict­ed that Pakistan’s growth rate for the current fiscal year would reach 2%. Pakistan’s economy finally is moving in the right direction with an expected decline in inflation and unemployment rate.

While the IMF has predicted inflation in Pakistan to drop from 24.8% to 12.7% over the next two fiscal years, a rise in the current account deficit is expected. Unemployment rates are expected to decline by 1%. This prediction is in line with the decline in infla­tion globally and brings with it the promise of macroeconomic sta­bility for Pakistan. The pressure on consumers and businesses is likely to decrease as we move towards economic prosperity.

However, it is important for the government to maintain a slow and steady approach to economic management. Given the uncer­tainty surrounding the Middle East, there is no telling when new price spikes emerge out of nowhere, diverting the trend of disin­flation. Political stability has a direct impact on the economy of a country and due to the geopolitical tensions surrounding the Middle East, various channels such as trade disruptions and en­ergy prices could have an immediate impact on Pakistan’s econ­omy. Hence, it is important for the government to focus on build­ing a strong revenue structure with a focus on the expansion of the tax base and tax collection mechanisms. Policymakers must not give in to the opposition from wealthy and powerful factions that try to break free from the responsibility of tax compliance. We need to reduce our dependency on foreign aid as by generat­ing enough revenue domestically.

Furthermore, it is important for the government to address budget deficits and reduce the level of public debt. We need to cut down our expenditure and reallocate resources towards ar­eas that require immediate attention such as healthcare, educa­tion, and other various developmental projects.

Keeping these challenges in mind, the government must closely monitor the global situation and respond effectively to any adverse effects on the national economy. Ensuring fiscal stability is the re­sponsibility of the state and it must not disappoint its citizens who have been eagerly waiting for this momentary ease in their burden.

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