Inflation eased to 11.7% in 2024 and is expected to fall to 9% in 2025 due to tighter monetary policy and lower global prices. Rising labor incomes and remittances improved household consumption and living standards, contributing to a decline in extreme poverty to 20.7% in 2024, with a slight drop to 20.4% projected for 2025. The government is also scaling up targeted social programs to cushion vulnerable groups from economic shocks.
The fiscal deficit widened to 3.9% of GDP in 2024 due to unbudgeted spending but is expected to narrow to 1.4% in 2025 with stronger revenue collection. Public debt declined to 74.4% of GDP in 2024 and is projected to fall further to 71.3% in 2025, though the country remains at high risk of debt distress per June 2025 WB/IMF Debt Sustainability Analysis.
The current account deficit rose to 5.8% of GDP in 2024 due to OIC-related imports but is expected to narrow to 5.0% in 2025. The Central Bank maintained a tight monetary stance, keeping its policy rate at 17%. International reserves are projected to rise to 4.4 months of imports in 2025, while the exchange rate is expected to depreciate by 5.2% annually. The banking sector remains stable, with non-performing loans declining from 13.5% in March to 8.9% in June 2025.
