KARACHI: Pakistan’s inflation will ease to around 20-22% in fiscal year 2024, the central bank chief said on Friday in the Governor’s Annual Report 2022-23 issued weeks ahead of a national election which could help restore political and economic stability to the country.

The SBP will continue to take decisions to prevent high inflation from becoming entrenched, it said, adding that Pakistan’s economy missed by a large margin its fiscal and primary surplus targets in FY23, with real GDP contracting to 0.2%.

The country of 241 million people experienced its highest ever inflation in FY23, with its currency dipping to historic lows until a $3 billion IMF bailout averted an imminent sovereign default in July.

SBP Governor Jameel Ahmed also said in his report that the CPI surged to 29.2% in FY23, which is around the upper bound of the bank’s revised projections.

Inter-bank market: rupee closes 2023 at 281.86 against US dollar

Ahmed added that the central bank will keep inflation expectations anchored to achieve its medium term target of 5-7% by the end of FY25.

Fiscal and policy measures taken prior and after the bailout are stabilising the $350 billion economy as Pakistan approaches a national election on February 8.

The report said fiscal and primary surplus targets for the year were missed by a large margin.

Meanwhile, the finance ministry has also predicted inflation outlook for the remaining months of FY24 to be at a moderate level despite the upward revision of administered prices (gas prices).

Consumer Price Index (CPI)-based inflation in Pakistan for December is projected at 27.5-28.5%, the finance ministry said in its monthly economic report earlier this week.

The finance ministry anticipated inflation to further ease out to 24-25% in January 2024.