As the IMF Executive Board meeting approaches, the focus remains on how effectively Pakistan can implement the necessary reforms to stabilize its economy and ensure long-term growth. The upcoming decision will not only shape Pakistan’s economic policies but also signal the international community’s confidence in the country’s ability to overcome its current challenges.

The IMF Executive Board set the date for the September 25th, 2024 to meet to consider the approval of an important loan facility for Pakistan. This meeting comes after the staff-level agreement that was between the IMF and Pakistan in July 2024 and is a boost to the country’s efforts to stabilize its economy.

The macroeconomic contract signed in July for 37 months was supposed to cater for Pakistan’s worsening economic problems which included; Inflation, fiscal deficits and declining currency. Earlier this week, head of the IMF spokesperson office Ms. Julie Kozek said it through a statement that Pakistan has provided all assurances needed from development partners as required before the program is opened for consideration by the IMF board. These assurances point out that Pakistan has had support of its international partners and they continue to provide assistance with regard to the development of the country’s economy.

The upcoming Board of Directors meeting will also discuss the nine months of the Stand-By Arrangement (SBA) that was undertaken by Pakistan in 2023 and was helpful in avoiding the country to get defaulted internationally. It demonstrated the ability of IMF to implement the SBA, which is centered on fiscal consolidation, control of inflation, and structural changes, that paved way for an extended package now in the making. IMF has expressed appreciation of the micro management of the economy of Pakistan under SBA terming some indications of stabilization and a positive outlook on growth.

However, it can be noted that there is still a long way for Pakistan’s economy to go on the path of solid economic growth and development. The country has been experiencing high inflation rate, devaluation of its currency as well as increased borrowing from the outside world. The IMF new loan program also clearly focuses on the long-term aspect in order to solve long-standing problems. Amongst them are the reduction on subsidies, efficiency in tax collections, restructuring of state owned enterprises, and good governance and transparency in major areas of the economy. The stated role of the IMF is accorded a strategic role in transforming Pakistan’s economy to sustainable growth and development and hence financial stability.

Prime Minister of Pakistan Shehbaz Sharif also remains optimistic about the on-going negotiations with the IMF, saying the talks are going well. However, he stressed that the reforms had to be continued, with growth stimulating and inflation rate being taken below ten percent. on the same day of announcement of NPCI the State Bank of Pakistan reduces the interest rate by 2 percent that has set the policy rate at 19. 5% to 17. 5%. Prime Minister Sharif welcomed this decision, saying that it would be good for industries, traders, and exports.

Albeit, the interest has been reduced slightly, the government still has a challenge of how to balance the economical stability of the country without going deep into external debt. Of this, Sharif was well aware, with the emphasis he put on the idea of the need to minimize the country’s reliance on loans. Speaking to the federal cabinet, he appreciated friendly countries for extending support in pushing for negotiations with the IMF and emphasised on the need for building up the economy of the country.

Source: https://www.bbc.com/urdu

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