Target to reduce inflation to 5-7pc by next year, says Finance Minister

Islamabad: State Bank Governor Jameel Ahmed on Wednesday briefed the National Assembly’s finance committee, that government has set a target to bring the inflation rate down to five to seven percent by the next year.

He said that in 2022, the inflation rate was at a high of 29.2%. Last year, it was 23.4%, and this year the target is to keep it between 11.5% and 13.5%.

Ahmed also shared that the current account deficit in 2022 was $17.5 billion, which was -4.7% of the GDP. In 2023, this deficit reduced to $3.3 billion, and in 2024, it further decreased to $0.7 billion.

He highlighted that Pakistan has to repay $26.2 billion in loans this year. Out of this, $12 billion will be rolled over, $4 billion is bilateral commercial debt that comes and goes, and out of the remaining $10 billion, $1.4 billion has already been repaid. The remaining $8.6 billion will be repaid this year.

Governor Ahmed assured that the State Bank currently holds $9.2 billion in reserves, which is more than enough for the repayments. The Minister of State for Finance also assured that there are sufficient funds available for the remaining payments, even if no additional funds are received from elsewhere.

He further informed that steps are being taken to improve the fund transfer system for the beneficiaries of the Benazir Income Support Program (BISP). Instead of manual transfers, the plan is to use the "Raast" system to reduce human intervention. This will provide 93 million beneficiaries access to financial services, including bank accounts, and they will be able to withdraw funds using cards.

Ahmed stated that the State Bank has introduced the state-of-the-art "Raast" system, which is unmatched by any other system. This fiscal year, the beneficiary-centric model will be finalized, and steps will be taken to reduce the banks' intervention.