IMF ready to support Pakistan, advocates for stronger economic reforms

Lagarde terms meeting with Prime Minister Imran Khan 'good and constructive'

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DUBAI: International Monetary Fund (IMF), Managing Director Christine Lagarde on Sunday said it was ready to support Pakistan but reiterated decisive policies and a strong package of economic reforms need to be undertaken to restore the resilience of its economy.

She gave these remarks on the sidelines of her meeting with the Prime Minister Imran Khan at the World Government Summit in Dubai on Sunday.

The Prime Minister appreciated the IMF’s support to Pakistan and shared his vision for nation-building.

He reiterated the government’s commitment to undertaking structural & governance reforms and strengthening social protection in the country.

The IMF Managing Director acknowledged the steps taken so far by the Pakistan Government for stabilizing the economy and said the IMF will remain engaged in supporting Pakistan in sustaining its economic recovery.

The two sides agreed to work together on policy priorities and reforms aimed at reducing imbalances and laying the foundations of a job-creating growth path in Pakistan.

In this regard, deliberations between Pakistani authorities and IMF staff will continue to finalize an agreement on the contours of a program.

While talking about her meeting with the PM, Ms Lagarde said, “I had a good and constructive meeting with Prime Minister Khan, during which we discussed recent economic developments and prospects for Pakistan in the context of ongoing discussions toward an IMF-supported program.”

She added, “I reiterated that the IMF stands ready to support Pakistan. I also highlighted that decisive policies and a strong package of economic reforms would enable Pakistan to restore the resilience of its economy and lay the foundations for stronger and more inclusive growth.”

“As emphasized in the new government’s policy agenda, protecting the poor and strengthening governance are key priorities to improve people’s living standards in a sustainable manner,” said Ms Lagarde.

In a speech at the summit on Sunday, Khan said the government faced a massive fiscal deficit when it took office last year and was making efforts to cut it, though international investors were already showing confidence.

“We are seeing optimism, investors are going to the country, we feel Pakistan is about to take off,” he said.

On Saturday, Pakistan Today reported the government had decided to take up to $6 billion loan from the International Monetary Fund (IMF) from the next fiscal year.

Sources told that the government’s economic team and the international lending organisation has reached an agreement in their recent communication. “IMF has agreed to give the loan on Pakistan’s conditions,” they claimed.

According to details, Pakistan has assured the lending organisation that the government would make reforms in the Federal Board of Revenue besides increasing the revenue at 1.5pc of the GDP from next fiscal year.

Earlier, it was reported that the finance minister had refused to revise the revenue target of FBR despite the shortfall of Rs188 billion in the first seven months.

Sources claimed that the economic team also assured the lending organisation that the government would increase the spending on its social safety net.

In the budget presented in April 2018, the allocation for Benazir Income Support Programme (BISP) had raised to Rs124.7 billion for the fiscal year 2018-19 and the PTI government, in its manifesto, had stated that it would increase the funding for the downtrodden segment of society.

Sources further claimed that the PTI government assured the IMF team that expenditure would be further cut down to 10pc.

“IMF team also accepted the government’s stance for not further jacking up the electricity prices, as the team is satisfied with the recent measures pertaining to electricity prices,” they added.

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