Finance Division rebuffs rumours about suspension of IMF programme

The Finance Division has denied the rumours about the suspension of the International Monetary Fund (IMF) for the seventh tranche under the Extended Fund Facility (EFF) for Pakistan.
“The Finance Division and IMF remain engaged in data sharing and reform discussions as part of EFF. There is no truth to speculation about the suspension of programme. IMF has confirmed the same and also clarified that it remains committed to Pakistan’s macroeconomic stability,” the Finance Division said in a tweet.
In July 2019, the EFF was approved by the Executive Board for about US$6 billion at the time of approval. The IMF programme aims to support Pakistan’s policies to help the economic recovery from the COVID-19 pandemic, ensure macroeconomic and debt sustainability, and advance structural reforms to lay the foundations for strong, job-rich, and long-lasting growth that benefits all Pakistanis.
Earlier, the IMF said that Pakistan’s economy is set to continue recovering in the financial year 2022, with real GDP growth projected at 4 per cent, while inflation is expected to pick up this year before gradually slowing down. Continued commitment to a market-determined exchange rate and a prudent macroeconomic policy mix will help reduce the current account deficit and ease external pressures over the medium term.
However, it said, Pakistan remains vulnerable to possible flare-ups of the pandemic, tighter international financial conditions, a rise in geopolitical tensions, as well as delayed implementation of structural reforms. Strengthening the medium-term outlook hinges on ambitious efforts to remove structural impediments and facilitate the structural transformation of the economy. To this end, increased focus is needed on measures to strengthen economic productivity, investment, and private sector development, as well as to address the challenges posed by climate change.
“The Pakistani economy has continued to recover despite the challenges from the Covid-19 pandemic, but imbalances have widened and risks remain elevated. The authorities’ recent policy efforts to strengthen economic resilience are welcomed. Timely and consistent implementation of policies and reforms remain essential to lay the ground for stronger and more sustainable growth,” the international lender said.
“The authorities have taken important measures to strengthen fiscal policy and put public finances on a sounder footing. Along with careful spending management, revenue mobilisation will help to create space for much-needed spending on infrastructure and social protection, while improving debt sustainability. Maintaining the momentum on the reform of personal income taxation and harmonization of general sales taxes is essential. Broader reforms in tax administration and public financial and debt management are expected to further improve the fiscal framework,” the IMF said.