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International Monetary Fund. Middle East and Central Asia Dept.
Pakistan’s economy is at a critical juncture. Misaligned economic policies, including large fiscal deficits, loose monetary policy, and defense of an overvalued exchange rate, fueled consumption and short-term growth in recent years, but steadily eroded macroeconomic buffers, increased external and public debt, and depleted international reserves. Structural weaknesses remained largely unaddressed, including a chronically weak tax administration, a difficult business environment, inefficient and loss making SOEs, and low labor productivity amid a large informal economy. Without urgent policy action, economic and financial stability could be at risk, and growth prospects will be insufficient to meet the needs of a rapidly growing population.
International Monetary Fund. Middle East and Central Asia Dept.
This paper discusses First Post-Program Monitoring Discussions with Pakistan. Pakistan’s near-term outlook for economic growth is broadly favorable. Real GDP is expected to grow by 5.6 percent in FY2017/18, supported by improved power supply, investment related to the China–Pakistan Economic Corridor, strong consumption growth, and ongoing recovery in agriculture. Inflation has remained contained. However, continued erosion of macroeconomic resilience could put this outlook at risk. The FY2017/18 current account deficit could reach 4.8 percent of GDP, with gross international reserves further declining in a context of limited exchange rate flexibility.
International Monetary Fund. Middle East and Central Asia Dept.
This 2017 Article IV Consultation highlights that Pakistan’s outlook for economic growth is favorable. Real GDP is estimated at 5.3 percent in FY2016/17 and strengthening to 6 percent over the medium term on the back of stepped-up China Pakistan Economic Corridor investments, improved availability of energy, and growth-supporting structural reforms. Inflation has been gradually increasing but remains contained, and the financial sector has remained sound. Key external risks include lower trading partner growth, tighter international financial conditions, a faster rise in international oil prices, and over the medium term, failure to generate sufficient exports to meet rising external obligations from large-scale foreign-financed investments.
International Monetary Fund. Middle East and Central Asia Dept.
This paper assesses Pakistan’s Second Review Under the Extended Arrangement and Request for Waivers of Non-Observance of Performance Criteria. Discussions focused on progress in addressing the main macroeconomic challenges facing the country and remedial actions to meet missed performance criteria. Pakistan’s economic growth is expected to remain modest with GDP growth forecast revised upward to 3.1 percent. The IMF report highlights that the preliminary data for the first quarter of FY13/14 showed 5 percent growth, mainly driven by services and manufacturing.
International Monetary Fund
The 2010 staff report for the Fourth Review Under the Stand-By Arrangement addresses economic challenges faced by Pakistan. The implementation of the structural agenda faced delays but politically difficult reforms were assured to be executed. The resulting fiscal pressures had been expected to be largely offset by restraining nonpriority current spending. The authorities have shown their determination to pursue difficult, but necessary, reforms to implement the program despite lower-than-promised external assistance. IMF staff supported the requested rephasing of access and modifications to the performance criteria.