The press release of the 9th of May by the IMF highlights that the IMF Executive Board has completed the first review of the Extended Fund Facility arrangement with Pakistan. It also indicates the approval of the request for an arrangement under the Resilience and Sustainability Facility.

The last part of this statement includes a set of macroeconomic projections for 2024-25 and 2025-26. As highlighted below, these projections diverge significantly from the initial set of projections made at the start of the Extended Fund Facility in September 2024.

The objective of this article is to analyse these projections of GDP growth, employment, prices, general government finances, monetary and credit and the external balance of payments.

The IMF now expects that the GDP growth rate will be lower than originally projected. This reflects the relatively poor performance of the economy in the first three quarters of 2024-25. The Quantum Index of Manufacturing is down by 1.9 percent up to February 2025. The cotton crop is lower by over 20 percent, while there is no increase in the output of rice or wheat. Overall, electricity sales have fallen by 3 percent.

Consequently, the IMF has now projected the GDP growth rate at 2.6 percent, as compared to the expectation earlier that it would rise to 3.2 percent in 2024-25. Even the projection of 2.6 percent growth appears optimistic.

The projected growth rate originally for 2025-26 was 4 percent. This has now........

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