According to The News, the government anticipates a resurgence in inflationary trends, projecting an average CPI-based inflation rate of up to 7.5% for the 2025–26 budget. This marks a notable increase from the 5% recorded in the current fiscal year. Concurrently, the Ministry of Planning has issued a warning that the external sector could face considerable strain, as the relaxation of import restrictions and impending debt repayments are expected to widen the current account deficit in the forthcoming budget.
The Annual Plan Coordination Committee (APCC), scheduled to convene on June 2, 2025, is prepared to recommend the comprehensive macroeconomic framework for the next budget. This framework includes envisaging a GDP growth rate of 4.2% for the upcoming fiscal year, a significant rise from the 2.68% observed in the outgoing financial year. These macroeconomic projections indicate that a stabilization mode will persist in the coming fiscal year, operating under the stringent oversight of the IMF.
As per the government’s outlined prescriptions, public investment is projected to increase from 2.9% to 3.2% of GDP. Similarly, private investment is also expected to rise from 9.1% of GDP to 9.8%. The government acknowledges, “The fiscal and monetary policies will aim for consolidation and stability, with an expected inflation of 7.5% due to the low base effect and risk of ongoing trade tensions and domestic tariff rationalisation measures.”
It further concedes, “The external sector may face pressure, as easing import controls and debt repayments are likely to widen the current account deficit. Yet, strong remittances, export recovery, and anticipated external financing are expected to cushion these pressures and support external sustainability.” The impact of the base effect, which has contributed to lower inflation, is set to dissipate from the upcoming fiscal year, consequently elevating the CPI-based average inflation to 7.5% in 2025–26. This suggests that inflation will endure in the next fiscal year, spanning from July 2025 to June 2026, though it is expected to remain in the single digits. On a monthly basis, however, it might occasionally reach double digits.
