Pakistan's staggering economy is moving on the right path to recovering in the fiscal year 2022. According to IMF, the actual growth percentage of Pakistan is 4 percent. International Monetary Fund has also approved the loan under Extended Fund Facility program (EEF). An international body has also approved Pakistan's request for waivers of applicability and non-observance of performance criteria.
In Washington, the IMF board and Pakistani officials finalized the deal under the EEF and finished its sixth EEF review for signing the continuation of the loan. After this meeting, Pakistan can withdraw $1 billion from the fund. Currently, $3 billion will support the Pakistan budget under this fund.
Pakistan Finance Minister Shaukat Tareen confirmed this news through his tweet, "I am pleased to announce that the IMF Board has approved the 6th tranche of their program for Pakistan". The IMF had stopped this loan facility since last year. For the continuation of this facility, IMF proposed several conditions regarding import and tax reforms. Pakistan fulfilled all the requirements through the mini-budget. IMF demanded to make the State Bank of Pakistan autonomous. SBP bill last month passed in Parliament to give autonomy to SBP.
This week, Finance Ministry informed the IMF about the execution of all conditions imposed by the fund. Finance Ministry officials were expecting good news from the international body for the sixth share of EEF program.
RISING INFLATION
The IMF board warned of increasing inflation after the loan facility then it will reduce slowly. The monetary board signaled about the commitment to the market-based exchange rates. The current account deficit will reduce by adopting strong macroeconomics policies. The body stressed bolster its economy by adopting the recently devised policies related to economic stability. The government's structural transformation will take uniformity and continuous growth. Adopting additional economic policies will create jobs and uplift the social status of citizens. The IMF postponed the sixth review of the economy on Pakistan's request to expand the time frame needed to implement the conditions.
The IMF officials observed the fast-growing economic activities. At the same time, rising inflation and current account deficit are lingering hurdles for Pakistan in Covid 19. Recent Pakistan's economics policy was enough to stabilize and sustain macroeconomics' growth. The IMF benefits the countries with EEF loans that face a balance of payments due to structural deformities. The unique feature of EEF is the provision of extra time for repayment to mitigate countries in the implementation of long-term structural policies. The objective of this program is to provide a base for recovering from Covid 19 pressures and the current account deficit. It also aims to create structural reforms for long-term growth that benefit all Pakistanis.
Pakistan's susceptibility
The IMF observed that Pakistan took a stronghold on the economy in summer 2020 during Covid 19. Pakistan's government tackled the situation prudently. But current account deficit and exchange rates started putting on the economy in 2021. In 2021, Pakistan will face tight monetary conditions with strong geopolitical tensions in Afghanistan. The IMF recommended steps to strengthen economic growth and boost investment and private sector development. IMF suggested to cop challenges posed by climate change.
Remarks by Deputy Manager Director of IMF
Antoinette Sayeh, Deputy Managing Director and Acting Chair, issued the following statement:
"Pakistan's economy had struggled hard to bounce back on the right path. We welcomed the adoption of policies by the government to achieve sustainability. The government has taken the proper steps to improve fiscal conditions. It is essential to keep momentum on personal income taxation and general sales taxation for revenue generation. Giving autonomy to the central bank is the right track for financial stability and exchange rate regulations. Market determined exchange rate is beneficial in absorbing shocks from external factors like increased petroleum prices.
"Ambitious steps to remove structural impediments and facilitate structural transformation remain essential to boost growth, job creation, and improve social outcomes. The authorities are focused on state-owned enterprises reform, fostering the business environment and reducing corruption, promoting financial inclusion; and addressing the challenges posed by climate change."
Source:
https://www.dawn.com/news/1673057/imf-projects-pakistans-real-gdp-growth-for-2022-at-4pc-approves-waiver-request
