Daily Times

ISLAMABAD: International Monetary Fund’s Mission Chief to Pakistan Harald Finger has expressed hope that Pakistan’s economy will set on a new and sustainable course, breaking from the past cycles of near-crises and aborted stabilisation programmes.

“With stronger buffers, improved sentiment, gradually recovering growth, and prospects of more energy supply and an additional impetus from the China-Pakistan Economic Corridor (CPEC), there was hope that Pakistan’s economy would set on a new and sustainable course,” he wrote in an article published on Friday.

The IMF mission chief termed the completion of three-year Extended Fund Facility (EFF) Programme by Pakistan as a notable achievement. “This is a notable achievement in itself, but particularly so for a country that has had to resort to IMF support regularly and often abandoned its reform programmes before completion,” he wrote.

He said that just three years ago, Pakistan’s economy was running out of steam and resources, however with the oil windfall and an improving external sentiment, Pakistan was able to triple its foreign reserves buffer through State Bank of Pakistan (SBP) foreign exchange purchases and foreign borrowing, which strengthened Pakistan’s shield against economic shocks.

Significant headway has been made under this programme, he said, adding that a lot remains to be done to put the economy on a more resilient footing and create conditions for more job opportunities and higher living standards for wide segments of society. He said that to make it a success, a consensus was needed that economic reform would be an ongoing process while difficult reforms that have been embarked upon would be completed on time.

While a lot of progress has been made in strengthening Pakistan’s economic resilience, more was needed to adequately prepare the country for future economic shocks, he wrote, adding that continuing to build international reserve, buffers would be important given future debt repayment obligations and contingent liabilities, helping to safeguard against risks to exports, remittances, oil prices, and international capital flows.

In addition, he said, sufficient exchange rate flexibility would be needed to support the competitiveness of the export sector and contain the trade deficit. “There is also a need to continue pursuing reforms to strengthen Pakistan’s growth potential and ensure that gains in living standards are widely shared across society,” he added.

Swift progress on the economic policy agenda would be needed to create an environment in which a dynamic private sector could generate sufficient jobs to absorb new labour market entrants and where living standards improve for wide segments of society. He said that achieving all this would take time and effort and would also require a national consensus on the country’s priorities.