IMF Staff Concludes Visit to Pakistan

IMF News, September 20, 2019

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IMF mission led by Ernesto Ramirez Rigo visited Islamabad and Karachi during September 16–20, 2019 to take stock of economic developments since the start of the Extended Fund Facility (EFF) and discuss progress in the implementation of economic policies.
A full mission for the first review under the EFF is planned for late-October.
“This mission will not result in a Board discussion.”
“An IMF staff team plans to return to Pakistan in late-October to assess the end-September program targets.”

“The transition to a market-determined exchange rate has started to deliver positive results on the external balance, exchange rate volatility has diminished, monetary policy is helping to control inflation, and the SBP has improved its foreign exchange buffers.”
The near-term macroeconomic outlook is described as “broadly unchanged from the time of the program approval.”
Key projection: growth projected at 2.4 percent in FY2019/20.
Inflation is “expected to decline in the coming months.”
The current account is “adjusting more rapidly than anticipated.”
Caveat: “Domestic and international risks remain, and structural economic challenges persist.”

There has been “a significant improvement in tax revenue collections, with taxes showing double-digit growth net of exporters refunds.”
The FBR is undertaking “significant steps to improve tax administration and its interface with taxpayers.”
Staff and the authorities have analyzed the “worse than expected fiscal results of FY2018/19,” which were “partially the result of one-off factors and should not jeopardize the ambitious fiscal targets for FY2019/20.”
“Importantly, the social spending measures in the program have been implemented.”

Pakistan’s economic program is “off to a promising start, but decisive implementation is critical to pave the way for stronger and sustainable growth.”
“The authorities need to press ahead with their reform agenda.”
Monetary, exchange rate, and fiscal policies should continue to support disinflation, external adjustment, and rebuilding of buffers while advancing structural reforms.

IMF staff will return in late-October for the first review under the EFF to assess end-September program targets.
“The IMF team is grateful for the authorities’ hospitality and close cooperation.”

IMF Press Release No. 19/343 — IMF Communications Department, September 20, 2019.