FY2024 will see 2.52% rise in Pakistan’s economy: PBS
Better agricultural yields were a contributing factor to the nation’s overall economic performance in the agriculture sector. Arif Habib Limited (AHL), citing the Pakistan Bureau of Statistics (PBS), reported that the nation’s Gross Domestic Product (GDP) grew by 3.07% in the last quarter, from April to June 2024.
Positive, but variable, growth rates were also observed in the first three quarters of fiscal year 2024: 2.69% in Q1, 1.97% in Q2, and 2.36% in Q3. The country was facing economic difficulties, thus the agriculture industry was vital to this year’s progress.
Other parts of Pakistan’s economy, such industry and services, struggled severely as the agricultural sector prospered. The industrial output and economic activities were hindered by high inflation, energy shortages, and external debt. The overall GDP growth of 2.52% in the fiscal year 2024, in spite of these obstacles, is a moderate recovery when compared to previous estimates that had predicted lesser growth.
The second-highest amount ever agreed upon under any IMF program in terms of SDRs, the 37-month Extended Fund Facility for Pakistan has been approved by the IMF (SDR 5.32 billion, or USD 7 billion). A SDR 760 million (USD 1.1 billion) initial disbursement was made after this approval.
Strong policies and reforms that support the Pakistani authorities in improving macroeconomic stability, tackling major structural issues, and establishing an environment that supports more robust, inclusive, and resilient growth serve as the foundation of the new IMF program.
The IMF’s top priorities are:
Rebuilding macroeconomic sustainability and policy credibility: According to AHL, this calls for the consistent use of sensible exchange rate, monetary, and fiscal policies. Increasing public spending, taxing undertaxed sectors more fairly and efficiently, and freeing up funds to spend more on social security, health, and education are among the top priorities.
Increasing competitiveness and productivity: The main goals of reforms should be to level the playing field for fair competition and to eliminate state-created distortions that negatively impact the private sector business environment. This entails increasing bank intermediation, optimizing the regime for foreign direct investment, rationalizing subsidies, and increasing human capital expenditure.
Public service improvement and state-owned enterprise (SOE) restructuring: SOE privatization and reform, along with governance and transparency initiatives, will contribute to better public service delivery. Other actions include decreasing the energy sector’s cost structure and gradually eliminating the government’s involvement in determining prices.
Building climate resilience: With an emphasis on disaster risk reduction and sustainable infrastructure, the country’s resilience to climate change will be strengthened by implementing the Climate-Public Investment Management Assessment (C-PIMA) Action Plan and supporting the National Adaptation Plan.