Pakistan’s Economy Remains Fragile, Could Need More Support From IMF, Says FinMin Akhtar

The minister’s statements followed a day after the IMF and Pakistan government completed a review of the $3 billion stand-by agreement with a staff-level agreement.

Pakistan’s economy is still fragile even as some improvement has been seen recently, the country’s caretaker Finance Minister Shamshad Akhtar said. The minister noted that the debt-ridden nation would need to opt for more loans from the IMF for some time, the country’s local newspaper said on Friday. 

Quoting a report by the Pakistani newspaper Dawn, news agency PTI said that the minister asserted that Pakistan requires strong financial reforms to help strengthen the economy. Akhtar said, “The next International Monetary Fund (IMF) programme is very necessary for some time as the economy has returned to stability that was still very fragile. Until we are able to increase exports and domestic resources, we will need another programme.”

The minister’s statements followed a day after the IMF and Pakistan government completed a review of the $3 billion stand-by agreement with a staff-level agreement, thereby allowing Pakistan to receive $700 million in the second tranche. 

Commenting on the progress of the cash-strapped nation’s economy, Akhtar said, “The country will not survive without this. Probably, we will have to go into another EFF [Extended Fund Facility]. We will remain engaged with the IMF.” However, she added that it might be too soon to discuss this possibility. 

The finance minister noted that the current priority was to immediately begin work on the last $1.1 billion tranche available under the current facility to ensure smooth functioning for the new government. 

Talking about the major factors involved in the IMF agreement, Akhtar stated that the government is committed to regular tariff adjustments, such as a planned increase in gas prices in January to avoid piling up circular debt in the gas and power sectors. For the same purpose, the electricity and gas rates would be regularly revised and their costs controlled, apart from transferring the management to the private sector as soon as possible while expressing optimism about achieving the tax collection target.

Commenting on postponing the new $1.5 billion international bond, the minister said, “I have decided to postpone the new (international) bond. It is going to be expensive. Interest rates are very high. So, we cannot go to the international market.”

Akhtar stated that she hoped to secure a $2 billion disbursement from the World Bank itself during the current financial year. “We are quite comfortable with external accounts,” the minister said while stating that the IMF’s staff-level agreements, followed by distributions from other multilateral would help boost Pakistan’s credit rating.