IMF Warns of High Economic Risks in Pakistan

IMF Warns of High Economic Risks in Pakistan

IMF Warns of High Economic Risks in Pakistan

Key Highlights:

1. IMF issues stark warning on Pakistan’s economic future, citing significant downside risks.
2. Political uncertainty and policy slippages pose threats to stability and debt sustainability.
3. Urgent need for timely external financing disbursements emphasized by IMF.

The International Monetary Fund (IMF) has raised serious concerns about Pakistan’s economic prospects, highlighting substantial downside risks in its latest report, as per Dawn. Released ahead of discussions between the Pakistani government and the IMF for a new long-term program, the report underscores the country’s stability challenges.

The IMF staff report emphasizes the persistence of exceptionally high downside risks, particularly due to political uncertainty, which could impede policymaking amidst soaring living costs and complex political dynamics. The IMF warns that policy slippages and reduced external financing could jeopardize Pakistan’s progress towards debt sustainability and impact the exchange rate negatively.

External stability faces threats from various factors like increased commodity prices, shipping disruptions, and tighter global financial conditions, all of which could worsen Pakistan’s financial difficulties. Urgency is stressed regarding the prompt disbursement of post-programme external financing. Despite recent economic stabilization efforts, significant challenges remain, including a high fiscal shortfall and stagnant growth.

Prime Minister Shehbaz Sharif has advocated for a fresh, longer-term arrangement to tackle Pakistan’s ongoing economic issues. Pakistan is anticipated to seek at least USD 6 billion from the IMF and additional financing under the Resilience and Sustainability Trust to address these challenges effectively.

Source: Dawn