The State Bank of Pakistan (SBP) and the Ministry of Finance have developed a serious disagreement over the inflation projections for the next fiscal year as the central bank’s estimates of inflation are higher than those of the Ministry of Finance.
The central bank has pitched a CPI-based inflation rate of 13 to 14 percent that exceeds the estimates by the ministry which are 10 to 11 percent, according to a media report. The SBP claims that it will be difficult for budget-makers to restrict the inflation rate to single digit as the energy prices are expected to rise by 50 percent by December. Additionally, the SBP believes that the uncertainty arising from the Russia-Ukraine war may cause higher levels of fuel-induced inflation for oil-importing countries such as Pakistan.
The central bank has authority to pitch the inflation figures under the SBP Amendment Act, 2022. The two institutions also had a disagreement regarding the GDP growth figures for the next fiscal year.
Senior officials from both sides are finalizing the macroeconomic target for the budget which is to be presented to the Annual Planning Coordination Committee (APCC) on June 4. This will be followed by an approval from the National Economic Council (NEC) and the budget will finally be presented to the National Assembly on June 10.
