Pakistan: The International Monetary Fund (IMF) has warned that Pakistan’s economic challenges are “complex and multifaceted” and the risks are “exceptionally high.”
In a recently published report, the IMF noted that Pakistan’s economy had been hit by “significant shocks” in 2022, including floods that caused damage of more than $30 billion, the war in Ukraine, and other “fiscal as well as external pressures.”
“Addressing them requires steadfast implementation of agreed policies as well as continued financial support from external partners. Consistent and decisive implementation of programme agreements will be essential to reduce risks and maintain macroeconomic stability,” the report added.
The report came a week after it approved a $3 billion bailout programme, including the immediate disbursal of about $1.2 billion to help stabilise the economy of the South Asian country.
As part of the bailout, the lender imposed strict conditions, which included implementing a market-based exchange rate for the Pakistani rupee, raising energy tariffs, and reforming the energy sector.
The government has also told the IMF it will not introduce any new tax amnesty schemes or grant tax exemptions in the current fiscal year.
The IMF remarked that upon completion of the arrangement, a possible successor programme could be agreed upon with the government.
“Resolving Pakistan’s structural challenges, including long-term balance of payment pressures, will require continued adjustment and creditor support beyond the programme period. A possible successor arrangement could help anchor the policy adjustment needed to restore Pakistan’s medium-term viability and capacity to repay,” the report further added.
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