The Asian Development Bank (ADB) has said in its latest report that delays in the staff-level agreement for a one-billion-dollar tranche under the International Monetary Fund program for Pakistan were partly due to alleged fiscal irregularities. However, Pakistan’s Ministry of Finance has rejected the claim, describing it as a “statistical difference.”

In its Asian Development Outlook report, the ADB projected that Pakistan’s economic growth will remain around 3.5 percent in the current fiscal year, which is below the government’s target. The report warned that attempting rapid growth without addressing structural weaknesses could pose risks to economic stability.

The finance ministry clarified that the reported 413 billion rupee gap is actually due to differences between cash and civil accounts, and has already been shared with the IMF.

The report also highlighted that rising geopolitical tensions in the Middle East, particularly prolonged conflict scenarios, could increase global oil and commodity prices. This, it warned, may lead to higher inflation in Pakistan and put pressure on external accounts.

ADB further stressed that without reforms in energy, trade, and investment sectors, economic stability could remain at risk. It urged accelerated privatization, improved taxation systems, and stronger efforts to attract foreign investment.

Also Read: Pakistan stocks surge as ceasefire hopes lift markets

According to projections, inflation in Pakistan may rise above the central bank’s target range of 5 to 7 percent in coming months, with average inflation expected to reach around 6.4 percent.

ADB Country Director Emma Fan said Pakistan’s economy has shown signs of stabilization due to reforms, but cautioned that global risks require careful and prudent policy measures moving forward.