AIRLINK 67.52 Increased By ▲ 2.32 (3.56%)
BOP 5.62 Increased By ▲ 0.05 (0.9%)
CNERGY 4.55 Decreased By ▼ -0.01 (-0.22%)
DFML 25.71 Increased By ▲ 1.19 (4.85%)
DGKC 69.26 Decreased By ▼ -0.70 (-1%)
FCCL 20.00 Decreased By ▼ -0.30 (-1.48%)
FFBL 29.40 Increased By ▲ 0.29 (1%)
FFL 9.78 Decreased By ▼ -0.05 (-0.51%)
GGL 10.02 Increased By ▲ 0.01 (0.1%)
HBL 113.88 Decreased By ▼ -0.37 (-0.32%)
HUBC 129.23 Increased By ▲ 0.13 (0.1%)
HUMNL 6.70 Decreased By ▼ -0.01 (-0.15%)
KEL 4.45 Increased By ▲ 0.01 (0.23%)
KOSM 4.85 Decreased By ▼ -0.04 (-0.82%)
MLCF 36.69 Decreased By ▼ -0.31 (-0.84%)
OGDC 132.00 Decreased By ▼ -0.30 (-0.23%)
PAEL 22.51 Decreased By ▼ -0.03 (-0.13%)
PIAA 25.74 Decreased By ▼ -0.15 (-0.58%)
PIBTL 6.64 Increased By ▲ 0.04 (0.61%)
PPL 113.04 Increased By ▲ 0.19 (0.17%)
PRL 29.31 Decreased By ▼ -0.10 (-0.34%)
PTC 15.10 Decreased By ▼ -0.14 (-0.92%)
SEARL 56.59 Decreased By ▼ -0.44 (-0.77%)
SNGP 65.65 Decreased By ▼ -0.80 (-1.2%)
SSGC 10.97 Decreased By ▼ -0.01 (-0.09%)
TELE 8.64 Decreased By ▼ -0.16 (-1.82%)
TPLP 11.52 Decreased By ▼ -0.18 (-1.54%)
TRG 68.70 Increased By ▲ 0.08 (0.12%)
UNITY 23.64 Increased By ▲ 0.24 (1.03%)
WTL 1.33 Decreased By ▼ -0.05 (-3.62%)
BR100 7,308 Increased By 13 (0.18%)
BR30 23,853 Decreased By -1.6 (-0.01%)
KSE100 70,300 Increased By 9.4 (0.01%)
KSE30 23,127 Decreased By -44.4 (-0.19%)

Restrictive monetary policy, limited fiscal space challenging Pakistan’s economy: Ministry of Finance

  • In monthly economic report, it projects CPI-based inflation for February to hover around 24.5-25.5%
Published February 29, 2024
Pakistan’s consumers and businesses have been reeling under high inflation for months with a volatile exchange rate adding to the woes of the economy. Photo: AFP
Pakistan’s consumers and businesses have been reeling under high inflation for months with a volatile exchange rate adding to the woes of the economy. Photo: AFP

The Ministry of Finance has said a “restrictive stance of monetary policy and limited fiscal space are posing numerous challenges to stimulating Pakistan’s economy”.

The Ministry of Finance made these remarks in its latest monthly economic report released on Thursday.

Despite securing a last-minute deal with the International Monetary Fund (IMF) in July, Pakistan’s economy remains engulfed in a myriad of challenges.

The State Bank of Pakistan (SBP) has maintained its key policy rate at 22% since last year’s summer, while the government has struggled to contain rising debt, which ballooned to Rs65.188 trillion at the end of December 2023 compared to Rs 60.841 trillion at the end of June 2023.

The central bank is due to hold its next monetary policy committee meeting on March 18 with some analysts suggesting that easing may well be on its way.

Meanwhile, the Ministry of Finance said that despite the domestic challenges, “there is some optimism regarding Pakistan’s export markets”.

India’s basmati rice exports to fall as Pakistan’s surge

“The weighted average cyclical conditions in Pakistan’s main export markets are improving which will be supportive in providing a boost to export-oriented industries and thus overall economic growth.

“Despite some important headwinds, the Monthly Economic Indicator (MEI) remains in positive territory, indicating a gradual recovery in economic activities,” it noted.

The Ministry of Finance also projected Consumer Price Index (CPI)-based inflation in Pakistan to hover around 24.5-25.5% in February 2024.

Inflation to decline in February, could clock in at 23.5%: brokerage house

The finance ministry anticipated inflation to further easing to 23.5-24.5% in March 2024.

It said the inflation outlook for the upcoming month points towards a downward trajectory owing to better crops and a smooth supply of commodities. “Similarly, favorable input situations are set to bolster Rabi crop production,” read the report.

The report said that the industrial activity in December remained positive despite a specific sectoral slowdown.

“Notwithstanding, restrictive monetary and fiscal policies, the optimism is fueled by improvements in cyclical conditions in Pakistan’s export markets facilitating steady economic recovery,” it said.

“The stabilization measures encouraging business confidence coupled with exchange rate stability, contribute to a positive economic outlook for Pakistan amidst ongoing challenges.”

Pakistan’s headline inflation clocked in at 28.3% on a year-on-year basis in January, revealed Pakistan Bureau of Statistics (PBS) data.

IMF not onboard with energy ministry’s tariff rationalisation, circular debt management plans

The Ministry of Finance, in its latest report, also noted that in February, the administered prices of petrol and diesel increased in response to a notable surge in crude oil prices, highlighting the direct influence of global market dynamics on domestic fuel costs.

However, “despite the upward adjustment in transportation expenses and gas prices, the inflation outlook for the upcoming month may have a downward trend, primarily due to a decrease in the prices of perishable items on the back of better crops and ease in supplies.”

“Additionally, the high base effect would further contribute to keep the inflationary pressure on the lower side,” it added.


200 characters
Shahidnazir Feb 29, 2024 05:41pm
Best my business company
thumb_up Recommended (0) reply Reply