The seventh and eighth review reports released by the International Monetary Fund (IMF) have disclosed that the present Pakistan government has taken some steps for the restoration of the loan programme, it surfaced on Friday. The IMF said overall Pakistan has failed to meet three performance conditions. The summary of the seventh and eighth reviews of the extended arrangement under the Extended Fund Facility said the economic activity remained robust in FY22, fuelled by loose fiscal policy and a delayed monetary response to inflationary pressures. These combined with the international food and fuel price shocks led to a marked deterioration of the external position with an unsustainable current account deficit, a significant decline in reserves, and a marked depreciation of the rupee. At the same time, inflation has increased considerably, putting pressure particularly on the more vulnerable.

The reports said that the country has failed to meet the conditions relating to the foreign exchange reserves and primary surplus. Besides that, they informed, the country has also failed to meet seven structural conditions as well. The Fund admits that the present government has taken some steps for the restoration of the loan programme such as abolishing the fuel subsidy, increasing the policy rate and fixing the market exchange rate. Likewise, Pakistan has also set new goals for the social sector, say these reports. Furthermore, the reports inform, inflation rate in the country is expected to remain 20 per cent this year which may lead to protests, which may become problematic for the ‘unstable’ coalition government. On the loans borrowed by the country, the IMF says that these are expected to make up 72.1 per cent of the Gross Domestic Product (GDP) towards the end of this fiscal year (FY), while the economic growth rate is likely to remain 3.5 per cent. Similarly, the Fund forecasts the budget deficit to be 4.4 per cent of the GDP this FY.

Credit: Independent News Pakistan-INP