ISLAMABAD: Asian Development Bank (ADB) said in its recent report that political stability after upcoming elections in Pakistan could boost business confidence and pave way for new standby arrangement with International Monetary Fund.

“Political stability following general elections later this year, if achieved, will boost business confidence, as will new standby arrangement agreed with International Monetary Fund to support economic stabilisation and rebuild fiscal buffers,” says Asian Development Outlook (ADO) for September 2023.

Outlook has slightly revised Pakistan’s growth target to 1.9 percent for fiscal year 2023-24 against its projections of 2 percent made in April 2023. Report revised down country’s growth estimate for FY2023 to 0.3 percent (0.6 percent forecast in April). According to report, revised projection assumes modest rebound in demand, with private consumption and private investment growing by about 3 percent and 5 percent respectively.

Fiscal and monetary tightening will crimp demand, as will inflation staying in double digits. On other hand, implementation of economic adjustment program and likely smooth general election should boost confidence, while easing of import controls should support investment as fiscal tightening restrains public consumption.

On output side, better weather conditions will enable an increase in area under cultivation and in yields, supporting recovery in agriculture. Government’s relief package of free seeds, subsidized credit and fertilizer will also help.  Adherence to an economic adjustment programme through April 2024 will be critical for restoring stability and gradual recovery of growth, which is projected to reach moderate 1.9 percent in FY2024, with price pressures remaining elevated. Downside risks to outlook remain exceptionally high, it added.

Published in The Daily National Courier, October, 04 2023

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