Finance Minister Muhammad Aurangzeb on Thursday hoped the International Monetary Fund (IMF)’s Executive Board will approve the next $1.2 billion loan tranche in its upcoming meeting on Friday (today), stressing the country’s macroeconomic indicators are broadly on track.
Briefing the National Assembly Standing Committee on Finance and Revenue, he said Islamabad was committed to continuing prudent fiscal policies, improving external account performance, enhancing investor confidence, and undertaking structural reforms to achieve sustainable economic stability.
According to the minister, remittance inflows have increased through Roshan Digital Accounts, reaching $260 million in March. He said the country had improved its access to international capital markets through Eurobond issuances, and is on track to issue its inaugural Panda Bond later this year. Acknowledging the difficult global and regional environment, the minister said Pakistan had nonetheless successfully issued $750 million in bonds and was also planning to launch a $250 million Panda Bond this year.
Aurangzeb said exports had improved on both monthly and annual bases, while remittances and I.T. exports were also rising. He said the country expected to remain in a current account surplus, and foreign exchange reserves were projected to reach the equivalent of three months of imports by June.
The minister noted petroleum imports had increased the import bill, while inflation remained a major challenge for ordinary citizens. However, he maintained, the government has taken measures to control inflation and preserve macroeconomic stability during the crisis. He said economic growth for the current fiscal year was expected to remain between 3.7% and 4%.
$17 billion reserves
In his briefing to the NA panel, State Bank of Pakistan (SBP) Governor Jameel Ahmad said the central bank had purchased $27 billion from the open market over the past three years and repaid almost $5 billion last month. He hoped foreign exchange reserves would reach $17 billion by the end of June.
Ahmad said Pakistan’s economic growth was expected to improve during the current fiscal year, pointing to increasing large-scale manufacturing output as a key indicator of recovery. He said inflation had declined to 7% in February and was moving in line with official targets before geopolitical tensions disrupted the outlook.
The SBP governor acknowledged that rising energy costs and higher food prices had pushed core inflation to 8.2%, adding inflationary pressures were expected to ease once regional tensions subside.
On the central bank’s recent decision to increase the interest rate by 100 basis points, he said monetary policy decisions were based on inflation projections for the next eight quarters. He said energy price increases had pushed up core inflation, forcing the central bank to maintain a higher interest rate environment.
However, he maintained there were no restrictions on imports, adding Pakistan had made external payments of $4.5 billion in April without any new controls.