{
  "title": "Implementing the IMF-supported programme",
  "publication": "IMF Blog, July 5, 2019",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2019/07/05/vc070519-implementing-the-imf-supported-programme",
  "canonical": "https://www.imf.org/en/blogs/articles/2019/07/05/vc070519-implementing-the-imf-supported-programme",
  "overlayPath": "/en/blogs/articles/2019/07/05/vc070519-implementing-the-imf-supported-programme/index.md",
  "summary": "Key priorities (three): - First: Significantly improve revenues at federal and provincial levels to reduce the budget deficit by broadening the tax base while maintaining current tax rates. - Actions include elimination of exemptions and preferential tax treatment for many industries and individuals",
  "sections": [
    {
      "heading": "Economic situation and challenges",
      "content": "- Following several boom-and-bust cycles over the last 25 years, Pakistan’s economy is described as being in a challenging situation.\n- Public-sector deficits and losses in state-owned companies ballooned in recent years as successive governments were unable to increase revenues.\n- Government borrowing — both domestic and international — to cover fiscal gaps produced a heavy debt burden and a growing share of the budget for servicing debt.\n- Interest payments alone now absorb around 25 per cent of the government revenue, leaving little for development spending (public health, education, infrastructure).\n- The budget deficits, central bank focus on keeping a constant exchange rate, and lack of structural reforms led to:\n  - a steady loss of competitiveness;\n  - a surge in the trade deficit;\n  - depletion of central bank reserves to precariously low levels to finance imports;\n  - skewed growth toward consumption rather than productive investment;\n  - a difficult business environment that discouraged investment and job creation and fostered a large informal economy.\n- Without substantial policy change, risks cited include higher unemployment, higher inflation, and debt-servicing problems."
    },
    {
      "heading": "Government programme: objectives and design",
      "content": "- The government developed a comprehensive three-year programme to stabilise the economy and lay the foundation for robust and balanced growth.\n- If implemented with full determination, the programme is intended to put the economy on a path to stability and prosperity.\n\nKey priorities (three):\n- First: Significantly improve revenues at federal and provincial levels to reduce the budget deficit by broadening the tax base while maintaining current tax rates.\n  - Actions include elimination of exemptions and preferential tax treatment for many industries and individuals.\n  - Noted fact: only 1pc of Pakistanis pay income tax.\n  - Major effort planned to fight tax evasion and improve compliance, particularly to document the economy.\n  - Additional revenue is intended to enable greater social and infrastructure investment.\n- Second: Allow the exchange rate to be market-determined rather than continue borrowing resources to maintain a certain level that benefited imports and not local industry.\n  - A flexible and competitive exchange rate is expected to support domestic producers and exporters by giving them fairer prices for their goods.\n  - A market-determined exchange rate should help rebuild central bank reserves to provide a buffer against external shocks.\n  - The new regime is expected to help develop financial markets, critical to supporting growth.\n  - A strengthened and more independent central bank will guide monetary policy to contain inflation and reduce uncertainty.\n- Third: Protect vulnerable groups by increasing spending on social safety nets.\n  - The programme strengthens the Benazir Income Support Programme by increasing allocations by 80pc.\n  - Finalise updates to the National Socio-Economic Registry and expand coverage of beneficiaries.\n  - Expand the Conditional Cash Transfer programme and support to insulate the poorest households from adverse impacts of reforms.\n  - The government has factored in continual reassessment (and upscaling, if needed) of social spending levels as policies take hold."
    },
    {
      "heading": "Structural reforms and institutional measures",
      "content": "- Parallel to the three priorities, the government will address long-standing structural issues that hinder growth, including reforms to strengthen government institutions and increase public trust over time.\n- Measures to create a more transparent business and investment climate include:\n  - streamlining regulations;\n  - simplifying the process to pay taxes;\n  - bringing greater transparency and accountability in public spending;\n  - reforming the energy sector including the automatic implementation of regulatory decisions;\n  - improving governance at state-owned enterprises."
    },
    {
      "heading": "External financing and international support",
      "content": "- The IMF, together with other international partners, is working closely with the government to implement policies and reforms.\n- Key bilateral lenders, including China, Saudi Arabia and the UAE, are committed to providing financing to support the authorities’ efforts, amounting to over $38 billion during 2019-22.\n- This level of support is intended to encourage additional financing and investment from the private sector."
    },
    {
      "heading": "Implementation risks, public trust, and outlook",
      "content": "- Public scepticism is acknowledged due to past IMF-supported programmes that were not completed or where policies were quickly reversed.\n- Determined implementation to overcome entrenched resistance to reforms is considered critical to rebuilding public trust.\n- The government has developed a plan adapted to Pakistan’s circumstances and has already begun implementing many policies.\n- IMF assessment: the government’s commitment gives optimism that this time it will be different.\n\nJihad Azour, July 5, 2019. Originally published in Dawn, July 5th, 2019.\n\n---\n\n\nSource: https://www.imf.org/en/blogs/articles/2019/07/05/vc070519-implementing-the-imf-supported-programme"
    }
  ],
  "bullets": [
    "[Markdown version](/en/blogs/articles/2019/07/05/vc070519-implementing-the-imf-supported-programme/index.md)",
    "[Structured JSON version](/en/blogs/articles/2019/07/05/vc070519-implementing-the-imf-supported-programme/index.json)",
    "[Bundle manifest](/en/blogs/articles/2019/07/05/vc070519-implementing-the-imf-supported-programme/bundle-manifest.json)",
    "Authors: Jihad Azour",
    "Published: July 5, 2019",
    "Following several boom-and-bust cycles over the last 25 years, Pakistan’s economy is described as being in a challenging situation.",
    "Public-sector deficits and losses in state-owned companies ballooned in recent years as successive governments were unable to increase revenues.",
    "Government borrowing — both domestic and international — to cover fiscal gaps produced a heavy debt burden and a growing share of the budget for servicing debt.",
    "Interest payments alone now absorb around 25 per cent of the government revenue, leaving little for development spending (public health, education, infrastructure).",
    "The budget deficits, central bank focus on keeping a constant exchange rate, and lack of structural reforms led to:",
    "Without substantial policy change, risks cited include higher unemployment, higher inflation, and debt-servicing problems.",
    "The government developed a comprehensive three-year programme to stabilise the economy and lay the foundation for robust and balanced growth.",
    "If implemented with full determination, the programme is intended to put the economy on a path to stability and prosperity.",
    "First: Significantly improve revenues at federal and provincial levels to reduce the budget deficit by broadening the tax base while maintaining current tax rates.",
    "Second: Allow the exchange rate to be market-determined rather than continue borrowing resources to maintain a certain level that benefited imports and not local industry.",
    "Third: Protect vulnerable groups by increasing spending on social safety nets.",
    "Parallel to the three priorities, the government will address long-standing structural issues that hinder growth, including reforms to strengthen government institutions and increase public trust over time.",
    "Measures to create a more transparent business and investment climate include:",
    "The IMF, together with other international partners, is working closely with the government to implement policies and reforms.",
    "Key bilateral lenders, including China, Saudi Arabia and the UAE, are committed to providing financing to support the authorities’ efforts, amounting to over $38 billion during 2019-22.",
    "This level of support is intended to encourage additional financing and investment from the private sector.",
    "Public scepticism is acknowledged due to past IMF-supported programmes that were not completed or where policies were quickly reversed.",
    "Determined implementation to overcome entrenched resistance to reforms is considered critical to rebuilding public trust.",
    "The government has developed a plan adapted to Pakistan’s circumstances and has already begun implementing many policies.",
    "IMF assessment: the government’s commitment gives optimism that this time it will be different."
  ],
  "alternates": {
    "markdown": "/en/blogs/articles/2019/07/05/vc070519-implementing-the-imf-supported-programme/index.md",
    "json": "/en/blogs/articles/2019/07/05/vc070519-implementing-the-imf-supported-programme/index.json",
    "bundleManifest": "/en/blogs/articles/2019/07/05/vc070519-implementing-the-imf-supported-programme/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-08-27T18:08:45.861Z"
}