Pakistan Receives IMF's Assurance Of Economic Support

Jihad Azour, Director of the Middle East and Central Asia Department at the IMF said that Pakistan has indicated interest in a new program aimed at addressing critical challenges faced by the country

According to the IMF official, one key objective is maintaining macroeconomic stability

Source : Getty

The International Monetary Fund is prepared to assist financially strained Pakistan through essential reforms aimed at enhancing and stabilising the country's economic situation. Jihad Azour, Director of the Middle East and Central Asia Department at the IMF, told reporters during the annual Spring Meetings of the IMF and the World Bank that Pakistan has indicated interest in a new program aimed at addressing critical challenges faced by the country, reported the news agency PTI.

The recent program launched just ten months ago enabled Pakistan to reach several significant milestones in terms of economic stability, he noted. The successful completion of the last review will now be presented to the board, potentially concluding a program that has assisted Pakistan in addressing severe economic imbalances and sustaining its economic stability, expressed the IMF official.

“Those measures also allowed Pakistan to increase its buffers. Currently, the authorities have expressed interest in a new programme in order to help Pakistan address some of the key challenges,” opined Azour.

According to the IMF official, one key objective is maintaining macroeconomic stability. This entails ongoing efforts on the fiscal front to diminish budget deficits and enhance fiscal conditions by increasing revenue, which has been a prominent challenge historically. The official emphasised that a revenue jump would enable the government to tackle debt issues and allocate resources for additional social assistance. Another crucial aspect is the reform of the energy sector.

“This is a priority that has been there for some time, but it's still an important reform dimension for Pakistan. Three is to increase the potential of this economy to grow. Pakistan is a large economy with a large potential. Levelling the playing field, improving the business environment, and allowing the private sector to have more space internally and also on the export side will help Pakistan. Those are the key pillars that Pakistan would need in order to improve its situation and the Fund is ready to support,” Azour said.

Azour stressed that the significance of the reform package outweighs the sheer size of the program.

“Markets reaction was positive. We saw additional inflows; reserves have been rebuilt at the level of the central bank and even growth prospects have improved. Therefore, I think what is important at this stage is to accelerate the reforms, and double down on the structural reforms in order to provide Pakistan with its full potential of growth,” Azour said.

“Yes, we have had several programmes, but the priorities are still there and therefore the Fund is ready to assist when the government asks for that. And I think also bilateral partners of Pakistan are looking forward to the programme to extend their additional financial support to Pakistan,” he added.

The IMF's global team based in Washington recently reached a staff-level agreement with Pakistani authorities regarding the second and final review of Pakistan's stabilisation program, backed by the IMF's $3 billion standby arrangement approved in July last year.

Pakistan's Finance Minister, Muhammad Aurangzeb, is presently in the American capital to participate in the IMF meetings and engage in discussions with the organisation.