KARACHI: Fitch Ratings has projected a 12 percent inflation rate for Pakistan in the next financial year.
According to Fitch, the recent budget is likely to enhance Pakistan’s agreement with the International Monetary Fund (IMF), although it remains uncertain if financial targets will be achieved in the forthcoming fiscal year.
Fitch Ratings indicated that the government’s measures could alleviate pressure on external payments. However, economic growth is anticipated to be lower than expected, with a projected growth rate of 3% for the next financial year.
The situation regarding external payments has shown improvement since the elections, which has contributed to a more favorable economic outlook.
The ratings agency emphasized that the fiscal deficit could be reduced through economic discipline embedded in the budget. The gap between exports and imports is expected to narrow to between 0-3% of GDP. Last year, this difference was 1% of GDP.
Additionally, enhancements in the foreign exchange system have positively impacted remittances, and better agricultural exports have further improved the economic situation.
Fitch also noted the potential for some of Pakistan’s debts to be rolled over in the next budget, providing further relief to the country’s financial position.
