Pakistan makes progress in economic reforms: IMF

Dubai: Pakistan has made considerable progress in the last few months in advancing reforms and continuing with sound economic policies, the International Monetary Fund (IMF) said in a statement after concluding its mission to Pakistan.

An IMF mission, led by Ernesto Ramirez Rigo, visited Islamabad during February 3-13, to initiate discussions on the second review of the authorities’ economic reform programme supported under the Extended Fund Facility (EFF) arrangement.

The mission noted that all end-December performance criteria were met, and structural benchmarks have been completed.

“The IMF staff team had constructive and productive discussions with the Pakistani authorities and commended them on the considerable progress made during the last few months in advancing reforms and continuing with sound economic policies. The mission and the authorities made significant progress in the discussions on policies and reforms. In the coming days progress will continue to pave the way for the IMF Executive Board’s consideration of the review,” said Rigo.

Improving outlook

The IMF mission chief observed that macroeconomic outlook remains broadly as expected at the time of the first review.

Economic activity has stabilized and remains on the path of gradual recovery.

The current account deficit has declined, helped by the real exchange rate that is now broadly in line with fundamentals, while international reserves continue to rebuild at a pace considerably faster than anticipated.

“Inflation should start to see a declining trend as the pass-through of exchange rate depreciation has been absorbed and supply-side constraints appear to be temporary. Fiscal performance in the first half of the fiscal year remained strong, with the general government registering a primary surplus of 0.7 per cent of GDP on the back of strong domestic tax revenue growth," said Rigo.

In September, Pakistan’s current account deficit dropped by 80 per cent to a 41-month low of $259 million, with a 111.5 per cent rise in foreign direct investment (FDI) and 194 percent increase in private investment.

With foreign direct investment (FDI) of $1.34 billion during the first half of the current fiscal year, a 68.3 per cent increase was registered in January, compared to $796.8 million of the same period of the previous fiscal year.

In early February , the reserves of the State Bank of Pakistan (SBP), the country’s central bank, also hit a 21-month high at $11.586 billion.

The financial developments in Pakistan have been duly recognized globally as well, with Moody’s Investor Service upgrading Pakistan’s economy outlook from negative to stable in December.

The World Bank has also acknowledged Pakistan as one of the top 10 “most improved” countries in the Ease of Doing Business Index.