Pakistan’s Finance Ministry anticipates that consumer inflation will remain steady in February 2025, projecting a rate between 2.0% and 3.0%. This follows a significant decline from the 24% inflation rate recorded in January 2024 to 2.4% in January 2025. The ministry attributes this positive trend to economic stabilization efforts under a $7 billion International Monetary Fund (IMF) program secured last summer. An IMF mission is scheduled to visit Islamabad next week for the program’s first review.
Additionally, the ministry reports a 31.7% increase in workers’ remittances, totaling $20.8 billion from July to January of the current fiscal year, compared to $15.8 billion during the same period last year. This surge in remittances has bolstered Pakistan’s foreign exchange reserves, contributing to economic stability.
However, challenges persist. Recent criticisms from international development finance institutions, including the World Bank’s International Finance Corporation, highlight concerns over Pakistan’s renegotiation of energy contracts with independent power producers. These institutions argue that such unilateral actions could undermine investor confidence and hinder long-term sector development. The Pakistani government maintains that these renegotiations are conducted amicably and are necessary to reduce unsustainable electricity tariffs.
As Pakistan continues its economic recovery, balancing structural reforms with maintaining investor trust remains crucial.
