Pakistan’s finance ministry anticipates inflation to ease further in August, following a predicted range of 12%-13% in July. This forecast comes after inflation peaked at over 30% in 2023, slowing to 12.6% in June. The ministry reports that the fiscal deficit has been reduced to 4.9% of GDP, down from 5.5% last year. The central bank has responded to the easing inflation by cutting interest rates for the second time in a row.
The positive news comes amidst concerns over a new $7 billion loan from the International Monetary Fund. The IMF’s conditions for the loan include tough measures such as increased taxes on farm incomes and electricity prices. This has sparked concern among the poor and middle class, who fear further inflation and economic hardship. One Islamist party has organized protests, threatening sit-ins in major cities if the government does not address rising prices.
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Pakistan’s economy remains fragile, with inflation a significant concern. The government’s ability to manage inflation and address public concerns will be crucial in navigating the challenging economic landscape.