Leading Issues in the Economy of Pakistan: Agenda for Reforms 5.2 IMF’s Macroeconomic Projections for 2022-23 The IMF’s macroeconomic projections fully incorporate the successful implementation by the Government of the Memorandum of Economic and Financial Policies, described in Section-1 of the report. They are presented in Table 5.1. Table 5.1: Key Macroeconomic Targets GROWTH RATE OF GDP(%) RATE OF INFLATION(%) CPI – Average CPI – End of Period LEVEL OF INVESTMENT(% of GDP) Private Public LEVEL OF SAVINGS(% of GDP) Private Public UNEMPLOYMENT RATE(%) CURRENT ACCOUNT DEFICIT(% of GDP) BUDGET DEFICIT(% of GDP) 2021-22 (Actual) 6.0 12.2 21.3 15.1 13.1 2.0 10.5 15.5 -5.0 6.3 -4.7 -7.9 2022-23 (IMF Projection) 3.5 19.9 15.0 16.9 14.7 2.3 14.4 16.8 -2.4 6.0 -2.5 -4.9 Growth: The IMF expects a big decline in the GDP growth rate to 3.5 percent in 2022-23 from 6 percent in 2021-22, largely as the outcome of the severely contractionary fiscal and monetary policies. However, perhaps surprisingly, it expects private investment to rise in real terms by as much as 12 percent, despite high interest rates and the end to concessionary project financing by the SBP. Rate of Inflation: The rate of inflation is expected to rise to almost 20 percent in 2022-23. This will hinge, of course, on the path of international commodity prices and the exchange rate during the year. The IMF expects the rupee to depreciate by 20 percent by June 2023. In addition, the Program requires quantum jumps in the prices of fuel products, electricity, and gas. There has also been a heavy dose of indirect taxation in the budget for 2022­23. Therefore, the rate of inflation may be significantly higher during the year than 19.9 percent. 66