Reform package prioritises fiscal sustainability: IMF

ISLAMABAD: The reform package that the Government of Pakistan has put together has several objectives including achieving fiscal sustainability by addressing some of the long-awaited fiscal issues.

This was stated by Jihad Azour, Director of Middle East and Central Asia Department, International Monetary Fund (IMF) during a press briefing. The reform package has not only the ambition to strengthen stability in terms of macroeconomic stability and reduced financing risks, but also has the ambition to reform some of the key sectors including the energy and the SOEs, improve the business environment, he added.

Azour said the projections are showing that the Pakistani economy will grow at 2.4 percent this year compared to minus 0.2 percent last year and expected for next year to grow at 3.2 percent. This constitutes an improvement at a time where we are seeing also inflation going down from 29 percent last year to 12.6 percent this year and we expect inflation to go down to 10.6 percent next year.

Stay the course on reforms, IMF urges Pakistan

He said the reform package that Pakistan has put together has several objectives. One is to achieve fiscal sustainability by addressing some of the long-awaited fiscal issues, especially on increasing the share of revenues in order to reduce the deficit, but also to improve the quality of the revenues by addressing some of the issues that existed in terms of tax collection and also in terms of special regimes.

Reforming the SOEs is also an important priority that will increase the capacity of Pakistan to provide a greater space for the private sector, level the playing field and increase FDIs by doing so. This will allow the Pakistani economy to be more export driven and also to be ready to attract additional investment, he added.

The IMF official said that the monetary policy is also helping by tackling the issue of inflation and also by reducing any construction constraints on capital flows as well as also on the exchange transfers which also with the broad context of reforms will allow additional predictability and will reduce the risks or the constraints on the current account.

Therefore, the package of reform that has been set has not only the ambition to strengthen stability in terms of macroeconomic stability and reduced financing risks, but also has the ambition to reform some of the key sectors including the energy and the SOEs, improve the business environment, attract more FDRs and allow the economy to be more export driven which will unleash the potential of the Pakistani economy without having an impact on the current account.

Copyright Business Recorder, 2024