IMF’s March meet­ing out­come to de­ter­mine in­flows for bud­getary sup­port

Enterprise - - National News -

Bud­getary as­sis­tance from bi­lat­eral or mul­ti­lat­eral credit agen­cies de­pend on the out­come of an up­com­ing meet­ing of In­ter­na­tional Mone­tary Fund (IMF).

The bud­getary sup­port lend­ing from the World Bank and Asian Devel­op­ment Bank de­pends upon the IMF sat­is­fac­tory re­port and gov­ern­ment’s abil­ity to keep for­eign cur­rency re­serves held by SBP (State Bank of Pak­istan) for over two months im­port.

The IMF’s ex­ec­u­tive board is sched­uled to meet soon in Washington DC for con­sid­er­ing ap­proval of re­port on Pak­istan’s post pro­gramme mon­i­tor­ing (PPM) in or­der to gauge eco­nomic health of the coun­try. Other cred­i­tors will de­cide fu­ture bud­getary sup­port for Pak­istan on the basis of the de­ci­sion.

As the coun­try is mov­ing close to gen­eral elections the IMF re­port will be con­sid­ered im­por­tant to set the course of ac­tions for Pak­istan’s ail­ing econ­omy.

In 2016, Pak­istan suc­cess­fully com­pleted the IMF’s $6.7 bil­lion ex­tended fund fa­cil­ity loan pro­gramme, but the coun­try failed to un­der­take de­sir­able structural re­forms to boost ex­ports, cur­tail im­ports, broaden tax base and over­come losses of cash-bleed­ing state-owned en­ti­ties and en­ergy sec­tor that again turned the econ­omy into cri­sis mode within just one and half year af­ter the end of IMF pro­gramme.

Pak­istan and the IMF staff have re­vised macroeconomic pro­jec­tions for the cur­rent fis­cal year af­ter which Ad­vi­sor to Prime Min­is­ter on Fi­nance Mif­tah Is­mail and Gover­nor State Bank of Pak­istan (SBP) Tariq Ba­jwa signed PPM re­port in mid Fe­bru­ary and al­lowed the IMF to re­lease the re­port af­ter get­ting ap­proval from its ex­ec­u­tive board.

Pak­istan and IMF agreed to keep bud­get deficit pro­jec­tion at over 5 per­cent of GDP for the cur­rent fis­cal year of 2017/18 as against the tar­get of 4.1 per­cent; last year, bud­get deficit stood at 5.8 per­cent. The fed­eral gov­ern­ment blamed prov­inces for the high deficit dur­ing the last fis­cal year.

Bud­get deficit came at 2.2 per­cent for the first half of the cur­rent fis­cal year. None­the­less, the bud­get deficit if kept at 5 per­cent of GDP dur­ing the elec­tion­eer­ing year would be con­sid­ered as a mir­a­cle on the part of the in­cum­bent regime be­cause spend­ing spree might grip the dwellers of fi­nance min­istries both at the cen­tre and pro­vin­cial lev­els dur­ing the last quar­ter of the on­go­ing fis­cal year.

Pak­istan also agreed with the IMF to keep devel­op­ment spend­ing at around Rs800 bil­lion to Rs850 bil­lion in the cur­rent fis­cal year in­stead of the ac­tual al­lo­ca­tion of more than Rs1,000 bil­lion.

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