An IMF delegation has probably arrived in Pakistan to conduct a ‘stock-taking’ as indicated by the Finance Minister. This is, therefore, the appropriate time for comments on the IMF Staff Report of September, 10, 2024, on the new Extended Fund Facility of the IMF to Pakistan. This programme is for 37 months and the total disbursement of the loan by the IMF is expected to be $7 billion.

The Staff Report contains an assessment of the current economic situation in Pakistan along with medium-term projections of the key macroeconomic indicators. The report also projects the external financing requirements of Pakistan up to 2027-28 and identifies how these can be fulfilled.

Further, from the viewpoint of successful implementation of the Programme, the Staff Report contains quarterly performance criteria, indicative targets and structural benchmarks for 2024-25. Attainment of these will signify successful performance by Pakistan and enable continuation of the Programme.

The objective of this article is to present an assessment of the macroeconomic projections in the IMF Staff Report.

We first look at the IMF assessment of the growth of the economy in 2024-25. The GDP growth rate is expected to rise from 2.4 percent in 2023-24 to 3.2 percent in 2024-25, and further to 4 percent in 2025-26 and to 4.1 percent in 2026-27.

The basic problem is that the sources of growth have not been identified. This would have required estimates of growth rates by sector and/or by components of expenditure. Consequently, the growth rate projections appear to be very subjective in character.

Current indications are that achievement of the GDP growth rate of 3.2 percent 2024-25 may not be possible. First, there is a ‘high base’ effect of the 17 percent growth in major crops in 2023-24. Already, it is clear that there has been a big decline in cotton output this year of over 21 percent and only a marginal increase in rice production. Further, wheat cultivation........

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