IMF Suggests ‘Decisive’ Reforms for The Program’s success

The International Monetary Fund (IMF) has stated that Pakistan’s economic program is off to a promising start, but decisive implementation is critical to paving the way for stronger and sustainable growth.

An International Monetary Fund (IMF) mission, led by Ernesto Ramirez Rigo, visited Islamabad and Karachi during September 16–20, 2019 to take stock of economic developments since the start of the Extended Fund Facility (EFF), and discuss progress in the implementation of economic policies.

Mission Chief Ernesto Ramirez Rigo commented after concluding the visit,

The near-term macroeconomic outlook is broadly unchanged from the time of the program approval, with growth projected at 2.4 percent in the fiscal year 2019-20, inflation expected to decline in the coming months, and the current account adjusting more rapidly than anticipated. However, domestic and international risks remain, and structural economic challenges persist. In this context, the authorities need to press ahead with their reform agenda.

He added that even though the authorities’ economic reform program is in its early stages there has been some progress in key areas. He highlighted that the transition to a market-determined exchange rate has started to deliver positive results on the external balance, exchange rate volatility has diminished, monetary policy is helping control inflation, and SBP has improved its foreign exchange buffers.

“There has been a significant improvement in tax revenue collection, with taxes showing double-digit growth net of exporters’ refunds. Moreover, the FBR is undertaking significant steps to improve tax administration and its interface with taxpayers.” he added.

The IMF stated that staff and the authorities have analyzed the worse than expected financial results of the fiscal year 2018-19, which were partially the result of one-off factors and should not jeopardize the ambitious fiscal targets for the fiscal year 2019-20. More importantly, new social spending measures in the program have been implemented.

The IMF mission will return to Pakistan in late October to conduct the first review under the EFF.