Washington – The International Monetary Fund expects Pakistan’s Gross Domestic Product to grow by about 4 percent in the fiscal year ending June 30, the same as the last year.
The South Asia’s second biggest economy has succeeded in achieving stability but steady implementation of reforms will be vital for the country to find a place among the world’s fast-growing emerging markets, the IMF said in a statement posted on its website.
The IMF’s Executive Board approved the latest disbursement under a 36-month IMF loan on March 27 based on the “solid progress made to date” on Pakistan’s economic reform agenda. Pakistan secured the $6.6 billion loan under IMF’s Extended Fund Facility in September, 2013.
“Pakistan has made good progress,” said Jeffrey Franks, the IMF’s outgoing mission chief for Pakistan in an interview released on April 7. “When the country approached the IMF for support in 2013, it was on the verge of a balance-of-payments crisis, and that crisis has been averted.”
Franks said the foreign exchange reserves were rebounding and the fiscal deficit, which peaked to over 8 percent of GDP in 20120-13, was set to decline to 5 percent of the GDP.
The IMF official, who will assume his new charge as the Director of the IMF’s offices in Europe, praised reduction in power subsidies one of the key achievements as part of the structural reforms carried out by the government of Prime Minister Nawaz Sharif which took over in June, 2013. The power subsides are down to 0.7 percent of the GDP from nearly 2 percent and were expected to further decline to 0.3 percent next year, he added.
Franks described the need for Pakistan to continue the policies, saying previous programs often went off track in the past when the immediate risk of a crisis receded. “A key challenge for Pakistan is to continue the policies that it has begun and push the reform.”
He also termed the security situation as a major challenge to maintain good economic stability in addition to the energy shortages which remains a serious constrains on growth.
“Pakistan has tremendous economic potential. My fondest hope would be to see reforms in place that allow the country to join those fast-growing emerging market economies that have pulled so many people out of poverty.”
IMF’s Resident Representative for Pakistan Tokhir Mirzoev, who recently assumed his charge, also met Pakistan’s Finance Minister Ishaq Dar and discussed the country’s economic profile and upcoming 7th IMF review in Washington.