IMF growth data

EDITORIAL: International Monetary Fund’s (IMF’s) World Economic Outlook (WEO) report projected Pakistan’s growth rate at 3.6 percent in 2025-26, a downward revision from the budgeted estimate of 4.2 percent, but stipulated that the flood damage was yet to be factored in, a stipulation that has merit, given that at the time of the release of the report the damage assessment had not yet been firmed up.

However, it is important to note that the staff-level agreement uploaded on the Fund’s website the same day, 14 October, as the WEO noted that the “recent floods — which have affected nearly 7 million people, caused over 1,000 deaths and severely damaged housing, public infrastructure and agricultural land — have weighed on the outlook particularly of the agriculture sector, bringing down the projected FY 26 GDP to about 3.25 to 3.5 percent.” Projections of the growth rate for the current year by the Fund and independent domestic economists are, therefore, from 2 to 2.5 percent.

Based on the 3.6 percent growth assessment by the WEO the likelihood of inflation forecast of 6 percent in the current year is therefore also unlikely to be realised. In this context, two observations are in order.

First and foremost, the weightage given to perishable items is 4.99 percent by PBS (Pakistan Bureau of Statistics) which in the post-flood period not only indicates an ever-rising allocation for these items that will affect different income groups differently but also the impact of floods on rural incomes is projected to be significant which, in turn, would increase poverty levels from the existing 44.7 percent, thereby requiring additional social safety outlays.

And, secondly, the impact of inflation on different households in the same income groups will vary based on its consumption pattern; for example, if the householder has children in school/university then a rise in the cost of education would absorb a substantial portion of his/her income. Thus the 3.79 percent weightage given to education by the PBS will affect him significantly while a householder with no children in school/university would remain unaffected.

It is also relevant to note that the IMF has extended a technical assistance to the PBS, which began in July this year, that argued that “important shortcomings remain in the source data available for sectors accounting for around a third of GDP” with particular reference to formulating a new Producer Prices Index.

The successful completion of this TA (scheduled end by June 2026) would, one hopes, resolve the recent IMF mission’s concerns over the lack of rationalisation between Pakistan Revenue Automatic Limited (PRAL) and PBS data.

In a Business Recorder exclusive PRAL, a subsidiary of the Federal Board of Revenue (FBR), acknowledged that the discrepancy of 11 billion dollars between its import data and PBS is attributable to (i) import data pertaining to trade facilitation schemes, including goods declarations (baggage, home consumption and commercial imports) and some other types of Goods Declarations import data, is not integrated into PBS system and is therefore not reported to PBS; and (ii) absence of standardised data definition.

However, a PBS official told this newspaper that they were under the impression that they were receiving complete customs-related import data from PRAL. The officials of the two entities claimed that the misreporting was not intentional.

The State Bank of Pakistan spokesperson, however, clarified that it computes the trade data on the basis of trade payments received from banks and therefore there will not be any significant revision in the current account — a key macroeconomic indicator.

To conclude, there is a need for data from multiple sources to be rationalised that would strengthen the government’s capacity to take informed timely decisions which, in turn, would benefit the people of this country.

Copyright Business Recorder, 2025