ISLAMABAD: The Pakistan government has warned of more inflation coupled with a slowdown of the economy, blaming the delay in inking the crucial deal with the IMF for the worsening economic crisis, according to a media report on Saturday.

In its monthly outlook report issued on Friday, the Finance Ministry also said that political instability has started feeding the strong inflationary expectations, The Express Tribune newspaper reported.

Holding back its inflation forecast figure for the outgoing month, the Finance Ministry painted a gloomy outlook of the economy, saying that the Monthly Economic Indicator, a tool to predict the economic growth rate based on past and current indicators, has further slowed. “Inflation in March may remain in the upper bound as observed in February when it was 31.5 per cent,” the ministry stated. Although it did not give a figure this time, the market expects inflation to shoot up to 36 per cent due to a host of negative measures, it said.

A conservative internal assessment of the Finance Ministry suggested around 34 per cent inflation rate in March. The ministry said that a “potential reason for rising price level is political and economic uncertainty.”

The ministry also noted that the delay in finalising the $1.1 billion IMF fund was causing further economic distress. “The economic distress resulting from delay of the stabilisation programme has exacerbated the economic uncertainty due to which inflationary expectations have remained strong,” the report said.