October 16, 2019 (MLN): The Deputy Director of IMF, Gian Maria Milesi Ferretti has said that there is a need for substantial fiscal adjustment as the deficit over the last year has exceeded expectations.
Expressing his views on the dynamics of Pakistan’s economy, he said that the domestic demand is going to be compressed because of fiscal adjustments.
He was glad that tax revenues were picking up, and stated that fortunately, this has been the case mostly for one-off reasons.
He further said that increased demand was witnessed in local currency assets by foreign investors in light of the fact that the exchange rate was more reflective of actual economic conditions, with some degree of floating
He felt that the authorities were steadfast in their implementation of the IMF program, but there were still some challenges that needed to be overcome.
He also said that there are a set of macroeconomic imbalances that need to be addressed.
He hoped that there will be a notable pickup in growth over the medium term to lift the living standards.
However, he was of the view that geo-political and trade tensions were taking a toll on manufacturing sector and exports of the country.
