Raza Khan

Pakistan has to get back International Monetary Fund (IMF) Extended Fund Facility (EFF) programme as soon as possible to revive its economy, experts said. They believe that getting back to IMF’s programme would not only provide the much-needed cash to Pakistan, but also help restore investors and lenders’ trust. Pakistan entered a $6 billion IMF programme in 2019, which was increased to $7 billion earlier this year. The programme’s 9th review is currently pending, with remote talks being held between the IMF officials and the government for the release of $1.18 billion.

The IMF’s executive board approved the revival of Pakistan’s EFF programme in August 2022 after suspension of few months. However, Pakistan’s bailout programme with the IMF has been stalled at the ninth review, while talks on the staff-level agreement have dragged on. Ishrat Husain, prominent economic expert and former governor of State bank of Pakistan (SBP), told WealthPK that Pakistan must fulfil its commitments to the IMF to get back into the lender’s programme sooner.

He said that Pakistan is running out of options and time due to economic crisis in the country. He said IMF is the only way forward in the current situation. “Securing the IMF tranche is crucial to unlocking funding from bilateral and multilateral partners, as the country’s forex reserves stand critically low,” Dr Ishrat said. He said that IMF wants the Government of Pakistan to impose additional taxes and raise the prices of certain commodities to make sure that revenue targets can be achieved.

The former SBP’s governor said that Pakistan should reduce the import of non-essential items so that the current account deficit can be managed. He said that Pakistan, in the long term, should not rely on IMF’s programmes as these were not the actual solution to the financial problems faced by the country. “Although Pakistan has to complete the current IMF program, it should try to avoid such loan facilities in future,” he added.

Dr Sajid Amin, Deputy Executive Director at Sustainable Development Policy Institute (SDPI), was of the view that restoring trust of foreign investors and international lenders by getting back the IMF programme should be the primary focus for the government. “Completing the IMF programme by implementing its conditions is compulsory to come out of the current economic crisis,” Dr Sajid said.

He said the government should act fast and need to make necessary budgetary adjustments to collect more revenue as committed to the IMF. “To get out of present economic crisis, Pakistan must work on a four-pronged strategy which include getting the IMF back, a market determined currency exchange rate, rollover or rescheduling of debt, and effective social protection,” he suggested. “It must be understood that any economic policy distorting the exchange rate and fixing currency price is bound to fail. It will add further to economic instability,” he added.

Credit: Independent News Pakistan-WealthPk