ISLAMABAD: Inflation in Pakistan could average 33 percent in first half of 2023 before trending lower, and bailout from International Monetary Fund (IMF) alone is unlikely to put economy back on track, senior economist with Moody’s Analytics told Reuters.

“Our view is that an IMF bailout alone isn’t going to be enough to get economy back on track. What economy really needs is persistent and sound economic management,” senior economist Katrina Ell said in an interview. “There’s still an inevitably tough journey ahead. We’re expecting fiscal and monetary austerity to continue well into 2024,” she added.

“Even though economy is in deep recession, inflation is incredibly high as (result of) part of latest bailout conditions,” Ell said.

Consumer price index rose 27.5 percent year-on-year in January, it is highest in nearly half century.

Low-income households could remain under extreme pressure as result of high inflation on account of being disproportionately exposed to non-discretionary items.

“Food prices are high and they can’t avoid paying for that, so we’re going to see higher poverty rates as well feed through,” economist said.

Ell said Pakistan has not has great track record when it comes to IMF bailouts, so infusing additional funds alone may prove to be of little use. “If we’re going to see any improvement, it’s going to be very gradual. There’s just no overnight fix,” she said.

“You really need to see sustained sound macroeconomic management and just injecting further funds in there without decent backing is not going to deliver results that you’re looking for.”

Published in The Daily National Courier, February, 16 2023

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