IMF puts further pressure on Pakistan government

IMF puts further pressure on Pakistan government

Jason Wu, Assistant Director at the International Monetary Fund's (IMF) Monetary and Capital Markets Department, addressed the tightening of monetary policy in Pakistan over the past two to three years to combat inflation. He emphasized the need for further efforts on both the demand and supply sides to effectively manage inflation. In a press briefing, Wu highlighted that while inflation is projected to decrease, additional measures are required to address underlying issues contributing to inflationary pressures.

Regarding the recommendations provided by major international organizations, including the IMF, Wu discussed the importance of policies targeting both supply and demand factors affecting inflation. He emphasized Pakistan's ongoing efforts to tighten monetary policy and the necessity for continued fiscal consolidation to address demand-side issues.

Additionally, Wu underscored the significance of reforms in the energy sector and state-owned enterprises to alleviate supply-side constraints contributing to inflation.

Tobias Adrian, Financial Counselor and Director at the IMF's Monetary and Capital Markets Department, elaborated on the macroeconomic challenges faced by Pakistan and the efforts undertaken as part of an IMF program. Adrian highlighted the complexities involved in addressing financial sector issues and broader macroeconomic and fiscal concerns, noting that such adjustments require time to yield results.

Adrian further discussed the varying degrees of inflation risks faced by different countries, emphasizing the importance for central banks to ensure that inflation trends align with target objectives. He emphasized the need for clear communication from central banks worldwide to manage inflation expectations effectively, acknowledging the diverse approaches adopted by different countries in response to inflationary pressures.