Finance ministry forecasts boost in economic growth, significant reduction in inflation

GDP to grow by 4.8% in 2025-26; inflation forecasted to drop from 12% to 7.5%, says report

The finance ministry has projected that the fiscal deficit could soar to Rs9.655 trillion in the upcoming fiscal year, while it has projected a boost in economic growth and a significant reduction in inflation.

According to the ministry’s medium-term macroeconomic framework, the Gross Domestic Product (GDP) is expected to grow by 4.8% during this period, while inflation is anticipated to decrease from 12% to 7.5%.

The Federal Board of Revenue (FBR) is estimated to increase its tax revenue to Rs15.555 trillion, while non-tax revenue is expected to reach Rs3.851 trillion.

After experiencing a slight contraction in FY2023, Pakistan’s economy witnessed signs of recovery during the initial months of FY2024 with 2.7 per cent growth in Q1

Additionally, the government plans to collect Rs1.388 trillion from petroleum levies.

The finance ministry has also estimated that the fiscal deficit could reach Rs9.655 trillion in the next fiscal year, with concerns that the interest payments on debt could exceed Rs10 trillion, totalling Rs10.283 trillion.

Furthermore, the report anticipates exports to rise to $37.95 billion, and remittances to reach $31.70 billion during the fiscal year 2025-26.

The pension bill is projected to increase to Rs1.166 trillion, with civil administration expenses reaching Rs881 billion.

Defence spending is expected to climb to Rs2.337 trillion, while Rs1.480 trillion will be allocated for development projects.

These projections are part of the Finance Ministry’s strategic plan to stabilize the economy and ensure sustainable growth in the medium term.