Finance Ministry reports economic growth, inflation reduction

Report expect inflation to further decrease to 17.5% in May

By: Shakeel Ahmed

April 30, 2024April 30, 2024

Pakistan secures over $14bn in external funding (Courtesy: Online)

The Ministry of Finance has claimed improvements in the economic growth rate and a reduction in inflation.

According to the monthly economic update outlook report of the country, inflation falls between 18.5% and 19.5% this month, while it is expected to further decrease to 17.5% in May. The growth rate was 2.5% and 1% in the first and second quarters, respectively.

In the report, the payment of external loans and heavy interest have been declared a big challenge for the financial situation. According to the Finance Ministry, the financial deficit has increased by 34.8% to Rs3,224 billion in eight months. Financial discipline must be ensured for sustainable economic development.

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According to the ministry, economic growth will be moderate this year and better next year. In the first nine months of the financial year, the financial and external sectors have improved. In the first half of the year, the agricultural sector has improved by 5% to 8.6%.

However, the performance of major industries remained unsatisfactory compared to their target.

According to the report, tax revenue in eight months increased by 30% to Rs6,711 billion, non-tax revenue doubled to Rs2,267 billion, exports increased by 9.3% to $23 billion in nine months. Remittances increased by 0.9% to $21 billion.

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During this period, imports were recorded at $38.8 billion with a decrease of 8%, current account deficit was $500 million with a decrease of 87.5%, direct investment was $1.90 billion with a decrease of 9.7%. Foreign exchange reserves exceeded $8 billion, exchange rate exceeded Rs278.

According to the ministry, there was a reduction in development expenditure, improvement in primary surplus, 33.6% increase in agricultural loans and the volume was recorded at Rs1,434 billion, while there was a 54% decrease in credit provision to the private sector, as only Rs88.6 billion were issued, the report stated.

The ministry's second economic assessment and the approval of the final installment of $1.1 billion are welcomed, while the boom in the stock market is a sign of the restoration of investor confidence.