Karachi: The Alhamra Islamic Income Fund has released its accounts for the fiscal year ending June 30, 2024, highlighting significant macroeconomic recovery in Pakistan. The fund noted that the year saw the country avert a looming default and successfully implement a new International Monetary Fund (IMF) program, after several months of delay. This included a $3.0 billion Stand-by Arrangement from the IMF and timely rollovers from friendly countries, ensuring Pakistan's compliance with IMF targets.

According to information available from the Pakistan Stock Exchange (PSX), the caretaker government, which took office in August 2023, took decisive steps to stabilize the currency and crack down on illegal money dealers. These measures helped narrow exchange rate spreads and restored confidence in the financial market, with the PKR closing the year at 278.3 PKR/USD, appreciating 2.6% since the start of the year.

The country’s current account deficit (CAD) for the first 11 months of the fiscal year declined by 88% year-over-year, falling to USD 464.00 million. The improvement was driven by a 13.1% increase in exports and a 2.3% decline in imports. Additionally, foreign exchange reserves rose to USD 9.40 billion by June 2024, supported by inflows from the IMF and multilateral sources.

Inflation, measured by the Consumer Price Index (CPI), averaged 23.9% for the year. The government’s actions, including tariff increases and gas price hikes to comply with IMF conditions, contributed to controlling inflation, which slowed by the end of the fiscal year. The State Bank of Pakistan reduced interest rates by 150 basis points to 20.5% in June 2024, indicating a shift towards monetary easing.

Pakistan’s GDP grew by 2.4% during the financial year, led by agriculture, which grew by 6.3%, while the services and industrial sectors grew at 1.2%. Historic high interest rates and political uncertainty were cited as factors affecting the subdued industrial output.