The first six months of 2024-25 have revealed a mixed picture of the economy with some positive developments along with the persistence of various negative trends.

The start of 2024-25 was accompanied by a modest escalation of foreign exchange reserves to USD 9.4 billion by end-June 2024. This was facilitated by the one-year Stand-by Facility with the IMF. Pakistan has subsequently from September 2024 onwards entered into a three-year Extended Fund Facility with the IMF and total financing of USD 7 billion.

The Government which was inducted in February 2024 announced an ambitious budget for 2024-25, which envisages FBR revenue growth of 40 percent and a significant primary surplus of 2 percent of the GDP by the end of the year.

The presence of the EFF with the IMF has facilitated a further buildup of foreign exchange reserves. They stood at USD 11.7 billion in end-December, sufficient to provide import cover of up to two months.

The reduction in external financial vulnerability has motivated the new Government to claim that the economy of Pakistan has achieved ‘stability’.

The manifestation of stability is also on several other fronts. The exchange rate has remained, more or less, unchanged in nominal terms since March 2024 due to the buildup of reserves. This was facilitated by a positive current account balance in the balance of payments from July to December 2024.

The strongest impression of........

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