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International Monetary Fund. Office of Budget and Planning
The paper presents highlights from the FY 2020 budget, followed by a discussion of outputs based on the Fund Thematic Categories and of inputs.
International Monetary Fund. Middle East and Central Asia Dept.
This paper highlights Pakistan’s Request for Purchase Under the Rapid Financing Instrument (RFI). With the near-term outlook deteriorating sharply, the authorities have swiftly put in place measures to contain the impact of the shock and support economic activity. Crucially, health spending has been increased and social support strengthened. While uncertainty remains high, the near-term economic impact of coronavirus disease 2019 is expected to be significant, giving rise to large fiscal and external financing needs. The IMF support will help to provide a backstop against the decline in international reserves and provide financing to the budget for targeted and temporary spending increases aimed at containing the pandemic and mitigating its economic impact. In response to the crisis, the government of Pakistan has taken swift action to halt the community spread of the virus and introduced an economic stimulus package aimed at accommodating the spending needed to tackle the health emergency and supporting economic activity.
International Monetary Fund. Middle East and Central Asia Dept.
This paper discusses Pakistan’s First Review Under the Extended Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criteria. Pakistan’s program is on track and has started to bear fruit. However, risks remain elevated. Strong ownership and steadfast reform implementation are critical to entrench macroeconomic stability and support robust and balanced growth. The authorities are committed to sustaining the progress on fiscal adjustment to place debt on a downward path. The planned reforms include strengthening tax revenue mobilization, including the elimination of tax exemptions and loopholes, and prudent expenditure policies. Preparations for a comprehensive tax policy reform should start early to ensure timely implementation. The authorities have adopted a comprehensive plan to address the accumulation of arrears in the power sector. Its full implementation is key to improve collection, reduce losses, and enhance governance. Timely and regular adjustment of energy tariffs will bring the sector in line with cost recovery.
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.