Economic recovery plan

FOR much of 2023, Pakistan’s economic trajectory fluctuated from default panic to mitigation mode. The road remained rocky with a complex political scene, a population burdened with the devastating aftermath of the 2022 floods, rocketing domestic inflation, and the rupee in free fall against the dollar. With this backdrop, the government undertook timely tightening of external and domestic financing policy measures, combined with successful negotiations with the IMF, to conclude the critically needed $3 billion Stand-by Arrangement (SBA) until April 2024, a process which helped the country avoid sovereign default. As Pakistan transitions into the new year and moves towards a possible new IMF programme, chronic macroeconomic challenges will require urgent attention by the new government. Market forecasts for 2024 are not strong, averaging at estimations of two per cent growth, with modest economic recovery. The spectre of inflation looms large, recording 29.7pc in December 2023, and is expected to stay above 20pc in 2024. Unemployment and poverty rates have surged, and foreign reserves are under pressure due to the increasing trade deficit.