Pakistan expects GDP growth to slow to 5% amid fiscal consolidation

A man reads a newspaper while selling betel leaves, known as pan, cigarettes and sweets at a shop in Karachi, Pakistan December 30, 2021. REUTERS/Akhtar Soomro/File Photo

ISLAMABAD, June 4 (Reuters) – Pakistan’s GDP growth will slow to 5% for the next fiscal year beginning July 1, from 5.9% for the year ahead, following a fiscal tightening aimed at securing the support of the International Monetary Fund (IMF), announced the government. said Saturday.

The Ministry of Planning made the estimates before the annual budget which will be presented on June 10.

“Given the uncertain external and local economic environment, GDP growth will decline slightly and is projected at 5% for 2022-23 driven by agriculture (3.9%), manufacturing (7.1%) and the services sector (5.1%), “said the ministry in a working document seen by Reuters.

The document indicates that fiscal consolidation will be pursued to reduce the deficit through a combination of expenditure management and revenue improvement.

Pakistan’s foreign exchange reserves have fallen sharply in recent months – falling to $9.7 billion, less than 45 days of imports – and its double-digit inflation and growing current account deficit have put it in dire straits. hard.

Moody’s changed Pakistan’s outlook to negative from stable.

Pakistan is waiting for the IMF board to authorize a seventh review to resume a $6 billion bailout signed in 2019 after the two sides wrapped up talks in Doha last month.

The document indicates that the budget deficit for the July-March part of the outgoing fiscal year widened to 4% of GDP, compared to 3% of GDP for the corresponding period of the previous financial year.

The current account posted a deficit of 13.8 billion dollars (3.5% of GDP) in July-April of the outgoing fiscal year, he said.

Average inflation was recorded at 11.3% during the July-May period of the current financial year, against 8.8% during the comparable period of the previous year.

The new government of Prime Minister Shehbaz Sharif, who took over from ousted Prime Minister Imran Khan in April, said it had inherited a severe economic crisis.

Reporting by Asif Shahzad Editing by Peter Graff

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