Pakistan's current account adjusting more rapidly than anticipated: IMF

Sep 20, 2019: International Monetary Fund (IMF) Friday said Pakistan's current account was adjusting more rapidly than anticipated besides other key areas were also showing significant progress.

"Pakistan’s economic program is off to a promising start, but decisive implementation is critical to pave the way for stronger and sustainable growth", the IMF said in a statement issued at the end of a visit by the IMF mission led by Ernesto Ramirez Rigo.

The mission visited Islamabad and Karachi during September 16 to 20 to take stock of economic developments since the start of the Extended Fund Facility (EFF) and discussed progress in the implementation of economic policies.

A full mission for the first review under the EFF, is planned for late-October, the statement added.

Ramirez Rigo said, “While the authorities’ economic reform program is still in its early stages, there has been progress in some key areas. 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 to control inflation, and the SBP has improved its foreign exchange buffers."

“There has been a significant improvement in tax revenue collections, 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 said. Importantly, the social spending measures in the program have been implemented.

“The near-term macroeconomic outlook is broadly unchanged from the time of the program approval, with growth projected at 2.4 percent in FY2019/20, 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 said in order to complete the first review, an IMF staff team plans to return to Pakistan in late-October to assess the end-September program targets.

The near-term macroeconomic outlook, he said was broadly unchanged from the time of the program approval, with growth projected at 2.4 percent in FY2019/20, and inflation expected to decline in the coming months.

APP