IMF post program monitoring report raises serious alarm bells for Pakistan
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*LAHORE: *International Monetary Fund (IMF) post-program monitoring report for Pakistan has raised serious economic concerns for Pakistan.
IMF is predicting gross external financing needs are projected to touch $27 billion by next financial year.
Its report highlighted risks to Pakistan’s debt sustainability have risen since the Article IV consultation in June 2017 and increase in borrowings would contribute to external debt touching $103.4 billion by June 2019, predicted the IMF.
The Washington-based lender stated Pakistan had taken strides in improving its debt profile in last few years, but the public and publicly guaranteed debt remained around 70 percent of GDP in FY 2016-17 but is expected to slightly fall over the medium-term.
IMF said Pakistan’s elevated debt level in contrast to several emerging markets indicated fiscal imbalances under “relatively benign real sector assumptions” read the report.
It highlighted the baseline debt path also crossed the limit on public debt levels set forth in the revised Fiscal Responsibility and Debt Limitation Act (FRDLA). The report stated the gross financing needs are estimated to stay higher throughout the forecast period.
IMF advised for improving public debt sustainability and building sufficient fiscal buffers, sustained fiscal consolidation was required. The report pinpointed external debt remains sustainable but is susceptible to risks as external borrowing is predicted to rise and forex reserves will keep their downward slide due to present financial policies.
Pakistan’s public debt and publicly guaranteed debt at end of FY 2016-17 touched 69.7 percent of GDP reaching around 70 percent of FY 2015-16, said the report. Also, public debt leaving guarantees aside was recorded at 67 percent of GDP.
