ISLAMABAD- The International Monetary Fund on Wednesday expressed seriousconcerns over the direction in which Pakistan’s economy is heading andurged for a quick and effective look at the country’s near-team policies toregain fiscal discipline.
As part of its assessment, the IMF highlighted that Pakistan’s fiscaldeficit was all-set to reach 5.5 per cent of the country’s GDP -considerably higher than Islamabad’s previous prediction of 4.1 per cent.For the uninitiated, fiscal deficit occurs when a government’s expenditureis greater than the government’s revenue.
And this gap is what IMF fears will widen in Pakistan at a time when rivalIndia has projected a fiscal deficit of 3.3 per cent of its GDP for 2018-19financial year.
The IMF board has also reportedly projected the economic growth rate tostand at 5.6 per cent instead of 6 per cent targeted by Islamabad.
In a statement, IMF further noted that mounting fiscal financing needs andfalling reserves is a clear and present threat to Pakistan’s medium-termcapacity to repay the money it has borrowed. “Directors also emphasised theneed for prudent debt management and caution in phasing in new externalliabilities, and the urgency of tackling rising fiscal risks stemming fromcontinued losses in public sector enterprises,” the statement read.
All, though, is not dark and dingy for the economy though. IMF has alsonoted that inflation has remained constant and has commended the countryfor allowing certain exchange rate adjustment. The challenge ahead thoughwould be shielding pro-people spendings even as Pakistan attempts tocontrol overall expenditure and bolsters revenue-earning measures.