IMF and Pakistan Mull Lower GDP Target Amid Flood Fallout

The International Monetary Fund and Pakistani authorities are considering revising the country’s GDP growth target downward to 3.5% for the current fiscal year, as devastating floods and external pressures weigh on the economy. The talks, part of the IMF’s ongoing review mission in Islamabad, come as the government’s original target of 4.2% growth looks increasingly out of reach. The IMF itself projects Pakistan’s GDP to expand by just 3.6% in the next fiscal year, well below official forecasts. The discussions are focused on the economic impact of recent floods, which have damaged infrastructure, agriculture, and livestock, as well as broader policy actions and financing needs ahead of the next tranche under the Extended Fund Facility. Inflation is expected to accelerate, with projections in the 7-8% range for the current year. Foreign exchange reserves are seen reaching around $14.5 billion, while the current account deficit is estimated at $1.5 billion. Exports are forecast at $33 billion, with imports at nearly $60 billion, resulting in a trade deficit of about $27 billion by year-end. Remittances are expected to reach $36 billion. Negotiations are set to continue in the coming days, with both sides discussing structural reforms, tax measures, and external financing. Government officials described the talks as “constructive,” while the IMF stressed that effective implementation of agreed policies remains key for future disbursements.