MANILA: The Asian Development Bank (ADB) has warned that increasing food prices in Pakistan would push South Asia’s inflation higher and projected 1.9 percent growth rate for Pakistan in the fiscal year 2023-24, slightly below the April projection, assuming continued implementation of reforms and supportive macroeconomic policies, recovery from flood-induced supply shocks, and improving external conditions.
In its Asian Development Outlook September 2023, the ADB said that the country might achieve an economic boost if it managed to bring Political stability while holding general elections later this year and tackle the new standby arrangement agreed with the International Monetary Fund (IMF).
However, ADB warned that inflation in Pakistan would soar to 29.2 percent caused by supply shortages, the continued depreciation of the currency, import hurdles, etc.
It further maintained that normalized food supplies and lower inflation expectations, although tempered by higher power and gas tariffs and likely currency depreciation, could bring the inflation down to some extent in FY2024, but Pakistan’s inflation rate is now predicted to remain at 25.0pc in FY2024, a bit higher than what was predicted in April this year.
ABD on Pakistan Agreement with IMP
The ADB noted that compliance with an economic adjustment program signed with the IMF a few months before would be crucial for restoring stability and the gradual recovery of growth, adding that, however, price pressures were to remain elevated.
It is worth noting that in June Pakistan signed a standby Agreement with the IMF, where the country received its first tranche of Rs1.2bn in the middle of July, while the remaining two tranches would be available in November 2023 and February 2024, again after fulfilling the conditions including the holding of election on time.
