As the south Asian nation’s fiscal deficit grew by more than 115 percent between July and October of the current fiscal year, 2022-2023, revealed, Pakistan’s Ministry of Finance (MoF) predicted that the country’s inflation will remain high, between 21 and 23 percent.
“For FY23, economic growth is likely to remain below the budgeted target due to the devastation caused by the floods. This combination of low growth, high inflation, and low levels of official foreign exchange reserves are the key challenges for policymakers,” alerted the MoF on Friday in its Monthly Economic Update and Outlook report, according to The News Agency.
According to a report by Pakistan’s MoF’s Economic Adviser’s Wing (EAW), the government’s budget deficit from July to October 2022 was 1.5 percent of GDP (Rs1.266 trillion), up from 0.9 percent of GDP (Rs. 587 billion) in 2021.
The budgetary situation deteriorated as a result of increasing markup payments driving higher expenditure increases.
In the midst of this, Pakistan’s government must overcome the difficulty of helping those living in flood-affected areas.
“The EAW report said the average Consumer Price Index (CPI) in the first five months (July-November) of FY23 remained at 25.1 percent compared to 9.3 percent in the same period last year. It is expected that CPI inflation will remain in the range of 21-23 percent,” according to the report.
The report said: “The current account posted a deficit of $3.1bn for July-November FY23 against a deficit of $7.2bn last year, mainly due to an improvement in the trade balance.”
From $569 million in October, the current account deficit shrank to $276 million in November.
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