Economic activity stabilized in Pakistan, says IMF mission

Economic activity stabilized in Pakistan, says IMF mission
The International Monetary Fund (IMF) mission on Friday confirmed that economic activity in Pakistan has stabilized and remains on the path of gradual recovery.

The statement comes after the IMF delegation led by Ernesto Ramirez concluded its visit to Islamabad to initiate discussions on the second review of the authorities’ economic reform program supported under the Extended Fund Facility (EFF) arrangement.

“The IMF staff team had constructive and productive discussions with the Pakistani authorities and commended them on the considerable progress made during the last few months in advancing reforms and continuing with sound economic policies,” said the official press release.

The mission and the Pakistani authorities made significant progress in the discussions on policies and reforms, it added

The visiting mission said that ongoing progress will continue to pave the way for the IMF Executive Board’s consideration of the review.

“The macroeconomic outlook remains broadly as expected at the time of the first review. Economic activity has stabilized and remains on the path of gradual recovery.”

The IMF staff further admitted that the current account deficit has declined, helped by the real exchange rate that is now broadly in line with fundamentals, while international reserves continue to rebuild at a pace considerably faster than anticipated.

Giving hope for decline in the inflation, the IMF statement said: “Inflation should start to see a declining trend as the pass-through of exchange rate depreciation has been absorbed and supply-side constraints appear to be temporary”.

It further highlighted that fiscal performance in the first half of the fiscal year remained strong, with the general government registering a primary surplus of 0.7 percent of GDP on the back of strong domestic tax revenue growth.

“Development and social spending have been accelerated.”

Last year in July, the IMF has approved a 39-month extended arrangement EFF for Pakistan for an amount of about US$6 billion to support the economic reform program of the government.

Pakistan had received the first installment of $991.4 million loan on July 9, 2019.

In December of the last year, the IMF had issued the second installment of around $454 million, bolstering the foreign exchange reserves.