Fitch Ratings expects Pakistan’s inflation rate to stabilize at around 12 per cent and further interest cuts.
The agency forecasts that by the fiscal year 2025, the State Bank of Pakistan may reduce interest rates to 16 per cent, potentially easing the financial burden on borrowers. The upcoming fiscal year’s budget is pivotal in reinforcing Pakistan’s commitment to the International Monetary Fund (IMF) agreement. Adhering to fiscal discipline within this budget is essential to addressing the persistent fiscal deficit.
However, economic growth is a concern, with Fitch projecting that it may not meet the government’s target of 3 percent. Despite these challenges, economic recovery has been observed since the February elections, with increased economic activity.
A significant positive development has narrowed the current account deficit to 0.3 per cent, primarily due to strong agricultural exports. This improvement is vital as Pakistan prepares to meet foreign payment obligations, estimated at around $20 billion for the next fiscal year.
The report also hints at the possibility of rolling over some of the nation’s debt in the upcoming budget. While highlighting positive economic trends, the Fitch report also points out Pakistan’s ongoing challenges.
