IMF sticks to 2.5% growth forecast for Pakistan.

ISLAMABAD -- The International Monetary Fund (IMF) on Tuesday kept Pakistan's economic growth forecast unchanged at 2.5% but slashed inflation rate to 23.6% for the current fiscal year, in a move that is largely in line with official projections.

The global lender released its flagship report, the World Economic Outlook, at the start of annual meetings in Morocco.

It left Pakistan's economic growth projection unchanged at 2.5%, which is lower than the official target by 1%. But it is consistent with the figure the IMF gave in its last report.

Like the World Bank, the IMF did not accept Pakistan's 0.3% GDP growth claim for last year. The new report has shown an economic contraction of 0.5% in the previous fiscal year, which was the last year of the Pakistan Democratic Movement (PDM) government.

The previous government had pressurised the Pakistan Bureau of Statistics (PBS) to show a positive growth.

The 2.5% growth projection is the highest by any international financial institution. The World Bank has given a 1.7% growth forecast while the Asian Development Bank has projected growth of 1.9%. The State Bank of Pakistan (SBP) sees growth in the vicinity of 2%.

Pakistan's annual population growth is 2.6% and economic growth below the increasing ratio of population means that there will be higher unemployment and poverty in the country.

In its report, the IMF projected Pakistan's economic growth at 5% by the year 2028, a forecast that is subject to changes due to rapid economic developments taking place in the country.

The IMF cut Pakistan's average annual inflation forecast to 23.6% for the current fiscal year, which was 2.3% below the projection made in the IMF's staff-level report in July this year. The global lender predicted an annual inflation rate of 17.6% in June next year.

The 23.6% inflation is still significantly higher than the official target set by the central bank and the federal government.

Inflation in September spiked to 31.4% but the SBP deputy governor said last week that the pace of increase would start slowing down from October.

Inflation has remained on the rise due to administered increase in prices of energy, petroleum products and currency devaluation. On the back of military-pushed action, the rupee has recovered to Rs281 to a dollar in inter-bank market from the peak of Rs307 last month.

Prime Minister Anwaarul Haq Kakar said on Monday that had the government not initiated a crackdown on currency smuggling, the...