KARACHI: Pakistan’s central bank chief said on Thursday that the deceleration in inflation in the South Asian nation was broad-based, reflecting the combined impact of monetary tightening and fiscal consolidation.

Jameel Ahmad was speaking to international investors on the sidelines of the IMF, World Bank spring meeting in Washington.

He said inflation had fallen sharply over the past year, reaching a two-year low of 20.7% in March 2024 from a peak of 38% in May 2023.

Other factors contributing to the deceleration include an easing of restrictions on imports, improved agricultural output and a more favourable base effect, when compared with last year.

More importantly there has also been a marked decline in core inflation to 15.7% percent in March, after persistently remaining above 20% throughout last year, he said.

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Ahmad and Pakistan’s Finance Minister Muhammad Aurangzeb are leading a delegation to the spring meetings and the finance minister met with IMF Managing Director Kristalina Georgieva on Wednesday.

Aurangzeb has previously said that Pakistan was in discussions with the multilateral lender for a long-term Extended Fund Facility after an ongoing standby arrangement expired earlier this month.

Pakistan is in dire need of external financing to fight a chronic balance of payments crisis, which brought it to the brink of a default last summer.

Ahmad, however, told the investors that qualitative improvements in the external account had allowed the central bank to more than double its FX reserves from $3.1 billion in January 2023 to around $8 billion despite the repayment of a $1 billion Eurobond this month.

He said Pakistan was hopeful of signing a long-term IMF program, which will facilitate additional external financing and the adoption of structural reforms to deal with longstanding issues in the economy.