IMF will support Pakistan’s economy, deal worth 1.21 billion dollars
Islamabad. An important staff-level agreement has been reached between Pakistan and the International Monetary Fund (IMF), which is facing severe economic crisis, for additional economic assistance of about $ 1.21 billion. Under this new agreement, Pakistan is expected to get about $ 1 billion for its ongoing economic reform programs and about $ 210 million for programs related to climate and economic stability. With this, the total amount of assistance to Pakistan under these two programs will increase to approximately $5.7 billion.
Signs of improvement in Pakistani economy
According to the International Monetary Fund, Pakistan’s economy is now gradually showing signs of recovery. The country’s economic growth rate is expected to be around 3.6 percent during the current financial year. Apart from this, there has been relief in the inflation rate as compared to earlier and it has come down to about 10.3 percent in the month of September. Remittances sent by Pakistani citizens living abroad have also played an important role in saving the country’s economy from collapse, due to which Pakistan’s foreign exchange reserves have increased to about $21.5 billion by the end of September. The organization also believes that improvement in the country’s credit rating and its regaining access to international markets are positive aspects for the economy.
Future economic challenges and warnings
On one hand, this relief can prove helpful for Pakistan, on the other hand, IMF has also issued strict warnings to the country on many fronts. The organization says that global geopolitical tensions, rising energy prices, difficult financial conditions and trade barriers can become a major threat to the country’s economic recovery process. The IMF has instructed the Pakistan government to adopt strict financial discipline and strengthen its tax system. Additionally, emphasis has been laid on improving government expenditure, procurement processes and cash management to reduce the growing debt burden and heavy interest pressure on the government.
Special emphasis on energy sector and subsidies
IMF has described reform in Pakistan’s energy sector as one of its biggest priorities. This includes timely revision of electricity rates, streamlining the electricity distribution system and bringing the ever-increasing energy sector losses under control. On the other hand, the government’s increased spending in sectors like health and education has been appreciated, but it has also been advised that the costly fuel subsidy schemes should be abolished completely as soon as possible so that fiscal balance can be maintained.
