Karachi: MCB Pakistan Dividend Yield Plan has published its financial accounts review for the year ending June 30, 2024, showcasing a strong economic recovery for Pakistan. The country’s turnaround was driven by a new IMF program, which included a Stand-by Arrangement (SBA) of USD 3.00 billion from the IMF in June 2023. The report emphasized Pakistan’s adherence to IMF conditions, which helped stabilize the economy after months of uncertainty, supported by timely rollovers from friendly countries.

The caretaker government, which took office in August 2023, implemented key measures to stabilize the currency, after the exchange rate peaked at 307 PKR/USD in the interbank market. Following efforts to curb smuggling and control the abuse of Afghan Transit, the exchange rate strengthened, closing the year at 278.3 PKR, marking a 2.6% appreciation. The government also introduced mechanisms to manage external balances, reducing the deficit and restoring fiscal stability.

The report highlighted that the current account deficit (CAD) shrank by 88% year-on-year, from USD 3.80 billion in the prior year to USD 464 million for the fiscal year 2024. This improvement was primarily attributed to an 11.3% increase in exports and a 2.3% decline in imports, leading to a 17.0% reduction in the trade deficit. Pakistan’s foreign exchange reserves grew to USD 9.40 billion by June 2024, up from USD 4.40 billion the previous year, largely due to inflows from the IMF and multilateral sources.

Despite the recovery, inflation remained high, with an average CPI of 23.9% during the fiscal year, down from 29.0% last year. Currency depreciation and increased costs of food and energy contributed to inflationary pressures, exacerbated by the government's compliance with IMF-mandated tariff and price increases. The State Bank of Pakistan (SBP) took measures to mitigate inflation by reducing the policy rate by 150 basis points to 20.5% in June 2024.

According to information available from the Pakistan Stock Exchange (PSX), Pakistan’s GDP grew by 2.4% in fiscal year 2024. Agriculture showed robust growth at 6.3%, while services and industrial sectors expanded by just 1.2%, hindered by high interest rates and political uncertainties. The fiscal report also indicated an increase in FBR tax collection by 29.6%, reaching PKR 9.29 billion, though it missed the target by PKR 130 billion.