The International Monetary Fund’s (IMF) Middle East and Central Asian region Director, Jihad Azour, is satisfied with the economic reforms in Pakistan.
Azour arrived in Islamabad along with an eight-member delegation for talks with top government officials. He said that Pakistan had shown impressive performance by carrying out economic reforms in accordance with the Extended Fund Facility of the International Monetary Fund (IMF).
Jihad, during a press conference held in Islamabad along with finance adviser Hafeez Shaikh, said that the program had got off to a good start while noting that very little time has gone by since its commencement.
“I have come to support the measures taken under the program to bring in reforms,” he said, noting that the program was “headed in the right direction”.
“It is a new program and it is important to give some time to the government for taking more reforms to show good results. Pakistan was trying to take a number of reforms in various sectors of the economy,” Jihad said while addressing a press briefing at the finance ministry.
The $6 billion IMF loan program had been structured by the Pakistani government itself and its targets cannot be revised after only three months, he maintained.
Azour acknowledged that the reform process started well ahead of the IMF program with Pakistan, “which showed the seriousness of the government in achieving stability of the country’s economy.”
Satisfaction over the reforms
Appreciating the government’s reforms measures, he said that Prime Minister Imran Khan had assured them that the program would be adhered to and said that this would bring further economic stability to the country.
The visit was being described as “routine” by both sides. A finance ministry representative said the delegation, headed by Azour and Mission Chief to Pakistan Ernesto Ramirez-Rigo, was here “to review the program as per schedule.”
Appreciating the government’s reforms measures, the IMF director said it had successfully handled the issue of the exchange rate and monetary policy.
Encouraging Tax collections
Azour said that the Pakistan government was doing a good job in the tax collection which was evident from the fact that in two months, it had managed to collect 50% more General Sales Tax (GST) and around 30% more domestic tax revenues as compared to the same period last year, which is encouraging.
The country’s exports have also started showing positive numbers, which is imperative for sustainable economic stability, he added. He said that it is important for a big country like Pakistan to grow at a fast pace which would require certain structural reforms.
He said that due to the reform measures, there was some inflationary pressure on the people, however, the government is managing it well to ensure social protection of the extremely poor of the country.
Moreover, SBP Governor Reza Baqir said the devaluation of Pakistani rupee against US dollar was showing results as Pakistan’s exports are growing now. He said the economic growth projection for the current year was 3.5% and that growth trajectory would increase further in the future.
Right on Track
To another question, he said that nobody can expect to change the whole scenario dramatically and immediately. “The plan that we set is on track and gradually more results will be surfaced on the ground.” Responding to another question, Jihad said Egypt and Pakistan are two different economies and, therefore, the solutions would also be different.
To a question regarding the recent attacks in Saudi Arabia on Aramco’s oil facilities, he said the IMF had a certain number of recommendations for oil-importing countries and they must gradually reduce their dependence on petroleum products.
He said that Pakistan’s energy sector needs a complete revamp and stressed on the need to curtail the circular debt in the sector.
Dr. Abdul Hafeez Shaikh said the IMF program is important for Pakistan and the government is trying to achieve all targets and benchmarks set by the Fund.
IMF’s Director said that he was planning to visit in July 2019 but the visit of the Prime Minister of Pakistan to Washington led him to change his plan.
Jihad said the IMF team would again visit Pakistan by the end of October or in early November to review Pakistan’s economic performance during the first quarter of the fiscal year 2019-20.