ISLAMABAD: The International Monetary Fund said yesterday that Pakistan was broadly on track with reforms tied to a $6.7bn loan package, but warned it must act to rebuild foreign exchange reserves.
The Washington-based lender agreed the three-year programme with Islamabad in September and made an initial payment of $540m.
The package is aimed at reducing Pakistan’s fiscal deficit which neared nine percent of gross domestic product last year and reforming the energy sector to help resolve severe power cuts that have sapped growth potential.
Future payments are dependent on the completion of tough economic reforms measured at quarterly reviews.
An IMF team visited Pakistan from October 28 to November 8 for talks with top finance ministry and State Bank of Pakistan (SBP) officials.
Mission chief Jeffrey Franks said the programme was broadly on track , with all major benchmarks hit apart from foreign exchange reserves, which he said was missed in part due to SBP interventions to prop up the falling rupee.
Challenges on the balance of payments will persist for some time to come, so it is crucial that firm action be taken to begin to rebuild foreign exchange reserves, Franks said in a statement.
The nuclear-armed state, battling a homegrown Islamist insurgency, is blighted by a dysfunctional energy sector, with severe power shortages limiting GDP growth.
But there was brighter news for Pakistan on GDP as the IMF revised their growth forecast upwards slightly from 2.5 percent to 2.75 percent.
AFP
