IMF expects Pakistan's FX reserve buildup to continue

September 28, 2024 (MLN): The International Monetary Fund (IMF) expects the buildup in Pakistan's FX reserves to continue, supported by inflows under the Extended Arrangement, along with price discovery in the interbank market, which will help buffer external shocks, attract financing, and protect competitiveness and growth.

The global lender, in a detailed report released after approving Pakistan’s request for a $7 billion, 37-month Extended Fund Facility (EFF), said it expects the central bank's gross reserves to rise to $12.76 billion by June 2025, up from the current $9.5bn.

IMF said that strong action to address undercapitalized financial institutions and, more broadly, vigilance over the financial sector is needed to ensure financial stability.

The Washington-based lender stated that overcoming Pakistan’s longstanding structural challenges—most notably low productivity and economic openness, resource misallocation, and climate vulnerability—requires faster implementation of structural reforms.

Reform priorities include advancing the SOE reform agenda; scaling back distortive incentives, promoting a level playing field for all business; strengthening governance and anti-corruption institutions; and continuing to build climate resilience.

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