Pakistan: Second, Third, Fourth, and Fifth Reviews Under the Extended Arrangement Under the Extended Fund Facility and Request for Rephasing of Access-Press Release; Staff Report; Staff Supplement, and Statement by the Executive Director for Pakistan

IMF Staff Country Reports, April 8, 2021

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Pakistan: Second, Third, Fourth, and Fifth Reviews Under the Extended Arrangement Under the Extended Fund Facility and Request for Rephasing of Access-Press Release; Staff Report; Staff Supplement, and Statement by the Executive Director for Pakistan

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Bibliographic details

• Published: April 8, 2021
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781513576732.002

Executive summary

• While the Covid-19 shock temporarily disrupted Pakistan’s progress under the program supported by the IMF’s Extended Fund Facility (EFF), the authorities’ policies have been critical in supporting the economy and saving lives and livelihoods.
• Authorities’ response included:
  • health-related containment measures;
  • a temporary fiscal stimulus;
  • large expansion of social safety nets;
  • monetary policy support;
  • targeted financial initiatives.
• These measures, supported by sizable emergency financing from the international community, including under an RFI, helped contain the first Covid-19 wave of cases and the impact on the economy.
• Growth outcomes and near-term projection:
  • Growth slowed to –0.4 percent in FY 2020 (July–June).
  • Growth is expected to recover to 1.5 percent in FY 2021.
• Other recent developments:
  • The external position improved.
  • Inflation continued to decelerate through early 2021 despite supply-driven spikes in food prices.
• Emerging risk:
  • A second Covid-19 wave is unfolding, triggering exceptionally high uncertainty and downside risks.

Key findings and indicators

• Growth:
  • –0.4 percent (FY 2020, July–June)
  • 1.5 percent (expected, FY 2021)
• Inflation:
  • Continued deceleration through early 2021, despite supply-driven spikes in food prices.
• External position:
  • Reported improvement during the period covered.
• Uncertainty and risks:
  • Exceptionally high uncertainty and downside risks due to a second Covid-19 wave.

Policy assessment and recommendations (as summarized)

• Fiscal policy:
  • Implemented a temporary fiscal stimulus alongside expanded social safety nets to protect livelihoods.
• Monetary policy:
  • Provided monetary policy support to cushion economic impact.
• Financial sector measures:
  • Targeted financial initiatives to stabilize the financial sector and support credit flow.
• External support:
  • Sizable emergency financing from the international community, including under an RFI, materially supported the response.

Content in this bundle

• Executive Summary — Pakistan EFF-supported program review
  • Executive Summary — Pakistan EFF-supported program review (Markdown version)
  • Executive Summary — Pakistan EFF-supported program review (PDF)