IMF hails Pakistan's progress on reforms
The International Monetary Fund (IMF) on Saturday commended Pakistan for making considerable progress in advancing reforms and continuing with sound economic policies.
After a consultative meeting with Islamabad, the fund said in a statement that economic activity has stabilised and remains on the path of gradual recovery. It expects the Pakistan Tehreek-e-Insaaf government will post a primary surplus on the back of higher tax revenues.
"The IMF staff team had constructive and productive discussions with the Pakistani authorities and commended them on the considerable progress made during the last few months in advancing reforms and continuing with sound economic policies. All end-December performance criteria were met, and structural benchmarks have been completed," said the IMF Mission.
"The macroeconomic outlook remains broadly as expected at the time of the first review. Economic activity has stabilized and remains on the path of gradual recovery. The current account deficit has declined, helped by the real exchange rate that is now broadly in line with fundamentals, while international reserves continue to rebuild at a pace considerably faster than anticipated," said the IMF mission, which was led by Ernesto Ramirez Rigo, mission chief for Pakistan, Middle East and Central Asia.
Fawad Chaudhry, Pakistan's Minister of Science and Technology, recently told Khaleej Times that the current account deficit of Pakistan has been substantially brought down by the strict disciplinary actions and measures taken by the government while the rupee is also holding well without the intervention of the central bank.
"Current account deficit has declined by 73 per cent. And Pakistan government is not spending money to support its currency against the US dollar. It is now a free market that is actually supporting the currency. We have created a balance between imports and exports. And if exports target is achieved successfully, then the economy is on the right target," Chaudhry said during a recent interview.
IMF sees inflation should start to see a declining trend as the pass-through of exchange rate depreciation has been absorbed and supply-side constraints appear to be temporary.
High inflation is one of the biggest challenges for the Imran Khan-led PTI government which hit 12-year high of 14.6 per cent last month. Though government has announced a few measures recently to bring down inflation, which will take some time to materialise.
IMF said the first-half of current fiscal year (July-December 2019) period remained strong and the government will post a primary surplus of 0.7 per cent of GDP as a result of strong domestic tax revenue growth.