Government sets 12 per cent inflation target for FY 2024-25

ISLAMABAD: During the Annual Plan Coordination Committee (APCC) meeting on Friday, the government approved setting inflation rate in Pakistan at 12 percent for the upcoming fiscal year (FY) 2024-25.

Government authorities outlined the economic targets and expenditure plans for the fiscal year, with the Deputy Chairman of the Planning Commission chairing the meeting. Meanwhile, several ministers and senior officials from all provinces, Azad Jammu and Kashmir, and Gilgit-Baltistan were also present.

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The committee proposed a gross domestic product (GDP) growth target of 3.6 per cent for the upcoming fiscal year, aiming to stimulate economic expansion and productivity in cash-starved Pakistan. The committee also discussed sector-wise growth targets, setting the agriculture sector at 2 per cent, the industrial sector at 4.4 per cent, and the services sector at 4.1 per cent.

Budget projections indicate significant expenditures, with an estimated spending of Rs9,700 billion on interest on loans and a total budget deficit expected to reach Rs9,600 billion in the next fiscal year. The committee decided to address these issues by reducing the development budget, with only 36 per cent.

The national development programme was proposed at Rs2,709 billion, with the federal public sector development programme (PSDP) set at Rs1,221 billion. Allocation for infrastructure projects was increased by Rs324 billion, while the social sector development budget was also reduced. Sectors such as energy, transport, water projects, housing, and health were discussed during the meeting.

During the meeting, it was revealed that the per capita income saw an increase to $1,680. The savings ratio is proposed to be set at 11.6 percent, while the committee also discussed ways to manage the current account deficit and trade deficit.

Remittances were targeted at $30 billion to increase foreign exchange reserves and stabilize external balances.

The government approved a budget of Rs 1,221 billion for public sector projects next year. Ministries initially asked for a lot more money, but due to financial limitations, the budget was cut. Challenges included dealing with old commitments and issues still facing 2022 nationwide floods.

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To make the most of the budget, the committee focused on important national and foreign-funded projects. The budget covers infrastructure, energy, water, transport, social sectors, technology, governance, and regional development.