Karachi: Alhamra Cash Management Optimizer reported strong progress in its accounts review for the fiscal year ended June 30, 2024. The fund's performance was supported by Pakistan's improving macroeconomic indicators and a significant boost from the IMF Stand-by Arrangement (SBA) secured in June 2023, valued at USD 3.00 billion. The government's firm commitment to IMF targets, coupled with effective fiscal measures, allowed the country to successfully achieve all IMF reviews under the program, according to the fund's report.
According to information available from the Pakistan Stock Exchange (PSX), The caretaker government took decisive steps to address speculative pressure on the currency after taking office in August 2023. Measures to curb dollar smuggling and abuse of Afghan transit in September 2023 helped stabilize the exchange rate, reducing the gap between open market and interbank rates. This action also contributed to improved remittances and export proceeds, with the Pakistani rupee appreciating by 2.9% to close the year at PKR 277.9/USD.
The report highlighted a significant reduction in Pakistan’s current account deficit (CAD), which declined by 74% to USD 1.00 billion in the first eight months of fiscal year 2024 compared to USD 3.80 billion in the previous year. Improved exports and reduced imports, down 8.8%, were key contributors to narrowing the trade deficit. By the end of March 2024, foreign exchange reserves increased to USD 8.00 billion, aided by IMF inflows and other multilateral sources.
Headline inflation averaged 27.1% for the first nine months of fiscal year 2024, compared to 27.3% during the same period last year. Persistent inflationary pressures stemmed from currency depreciation and increased energy and food prices. The government raised electricity tariffs and gas prices to comply with IMF conditions, further fueling inflation. Despite this, the State Bank of Pakistan (SBP) maintained its policy rate at 20.0% as of June 18, 2024, due to the elevated inflation outlook.
GDP growth for the year was reported at 1.0%, driven by a 5.0% expansion in agriculture, while services and industrial sectors recorded modest performances.