IMF finds Pakistan economy on growth track, to meet reform targets

An area of concern, however, remains the high core and headline inflation.

By: ENS Economic Bureau | New Delhi | Published: May 11, 2014 4:33 am

The International Monetary Fund (IMF) has reaffirmed support to the Pakistan government’s efforts to implement economic reforms. After its third review of the progress on the reform front, the multilateral institution would propose releasing $550 million, the fourth tranche of its loan package to the country.

The IMF saved Pakistan from possible default by agreeing last September to lend it $6.6 billion over three years, making the loan conditional on economic reforms such as privatising loss-making public sector companies.

The IMF staff mission led by Jeffrey Franks, during its review of the situation in Pakistan found that economic indicators were improving with growth gaining momentum and credit to the private sector rising. An area of concern, however, remains the high core and headline inflation.

“Led by large scale manufacturing and service sectors, GDP will expand by about 3.3 per cent in FY14, accelerating further to reach 4 per cent next year,” Franks said in a statement.

“The mission urged the State Bank of Pakistan to remain vigilant on recent inflationary pressures in their monetary policy decisions, while continuing their ambitious program to rebuild reserves. For FY15, the authorities should target an additional reduction in inflation towards their medium-term goal of 6-7 per cent,” the statement added.

The IMF also found that the country’s reform programme remains broadly on track and have met a substantial set of performance criteria. The Pakistan government had also met its indicative target of social transfers to the poor and is ensuring timely payments to 4.7 million eligible families.

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