IMF raises inflation forecast to 9.9%

According to the Express Tribune, the International Monetary Fund has raised its inflation forecast for Pakistan to 9.9% for the current fiscal year, while leaving its growth projection unchanged at 3.5%. The revision came in the Fund's World Economic Outlook report, released on Tuesday on the sidelines of the annual meetings. In April, the IMF had projected inflation at 8.4% for fiscal year 2026-27, a figure it kept in the July report.

The IMF gave no Pakistan-specific reason for the higher figure, but it also lifted its projections for the Middle East and Central Asia, where a continuing conflict has disrupted energy supply and prices. The 9.9% figure sits above the official goal of 8.2%. The Fund has also objected to the government's fuel compensation scheme, calling it broad and costly.

Finance Minister Muhammad Aurangzeb told Reuters he was still confident growth would exceed the 4% annual target, although the IMF kept its 3.5% forecast. The IMF projects the current account deficit at 1% of GDP, or about $4.4 billion, roughly $450 million above its earlier estimate. Release of the staff-level report hinges on executive board approval of the loan tranches, which is tentatively slated for late November.