Immediately upon assuming office, the present Government had expressed serious concerns on the dire economic situation of the country and had committed to undertake a quick evaluation of all possible options.
The Government inherited 6.6% of fiscal deficit, more than a trillion Rupees of unaccounted for losses in the energy sector and an unprecedented and debilitating current account deficit running at $2 billion a month.
To correct the underlying imbalances, fiscal and monetary actions needed to be undertaken without delay. In this regard, the Finance supplementary (Amendment) Act, 2018 by the government and the policy rate increases by the State Bank of Pakistan are actions taken to stabilise the macroeconomic situation. In addition, regulatory duties on non-essential imports have had to be introduced to curb the unnecessary growth in imports.
After taking into account the current situation and consultation with the leading economists, the government has decided to approach the IMF for stabilisation and an economic recovery program. It should be noted that the government has engaged with the friendly countries in the lead up to this decision and this engagement will continue.
There have been ten IMF programs since 1990s in one shape or the other. It is essential to remember that there is a history of Pakistan repeatedly going to the IMF with every new government being forced to go with IMF program due to legacy of those who held power in the previous government. The challenge for the current government is to ensure that fundamental economic structural reforms are carried out to ensure that this spiral of being in an IMF program every few years is broken once and for all. In this regard the Finance Minister shall hold meetings with the top leadership of IMF during the annual meetings of World Bank / IMF at Bali later this week.
