The fiscal deficit is expected to narrow in the fiscal year 2024 from the previous year’s 7.9 per cent of gross domestic product, the federal government said in an economic report on Wednesday.

The report attributed the reason “largely due to a 12pc reduction in non-markup spending”.

“With a decline in non-mark-up spending, the primary deficit has been narrowed down to Rs112bn during Jul-May FY23 from Rs945.3bn recorded last year,” the report reads.

The government also said the current account deficit would remain within a sustainable limit and that Pakistan was gearing towards achieving “higher growth” of 3.5pc in FY24 due to various measures such as the agriculture package, industrial support, export promotion, encouragement of the IT sector and resource mobilisation, etc.

“To achieve higher and sustainable economic growth, it will require prudent and effective economic decisions, political and economic certainty, and continuation of friendly economic policies along with enough foreign exchange financing,” the report reads.

The government had earlier estimated the 2024 fiscal deficit at 6.54pc in its annual budget presented in June, which according to Finance Minister Ishaq Dar could further improve after new taxation of Rs215 billion, ahead of the country clinching a $3bn IMF deal.

Wednesday’s report said annual inflation had declined to 29.4pc in June down from 38pc recorded in May.

The IMF deal helped avert a near-default by Pakistan on its foreign debt due to an acute balance of payment crisis.

Additional reporting by Tahir Sherani.