IMF likely to approve $6 billion bailout package for Pakistan today
Last updated on: 03 July,2019 10:33 am
The bailout package will help Pakistan to pay its external debts and recover from its fiscal deficit
KARACHI (Dunya News) – The International Monetary Fund (IMF) Board is scheduled to meet on July 3, 2019 (today) in Washington, to consider three-year ‘extended fund facility’ of $6 billion for Pakistan.
Pakistan and the IMF have already inked the staff agreement on May 12.
Sources familiar with the matter told the media that Pakistan has adopted a tight monetary and fiscal policy stance based on all terms and conditions of the global moneylender in order to secure a three-year bailout package.
The bailout package will help Pakistan to pay its external debts, recover from its fiscal deficit, keep foreign exchange reserves to the equivalent of 3 months of imports and curb further devaluation of the rupee.
A couple of days ago, the Economic Coordination Committee (ECC) approved a significant increase in prices of natural gas for domestic consumers, which was one of the conditions of the global moneylender to secure its bailout package.
According to analysts, financial assistance from ‘friendly’ countries has not proven to be enough for the government to recover from the current financial crisis.
They are of the view that chances of Pakistan securing the bailout package are high as the country has accepted all terms and conditions; however the deal would have adverse effects on its economic growth.
Fitch revises Pakistan economic growth
A few days ago, Fitch Solutions, a US-based global research house, revised down Pakistan’s economic growth to 2.7% for the next fiscal year 2019-20 from a previously quoted estimate of 4%.
In the report, experts opined that higher taxes will erode the purchasing power which in turn would slowdown consumption growth to 5.3% in FY20, down from 6.3% in FY18.
The consumption currently stands at around 82% of the GDP.
“Given our expectations for continued upside pressure on consumer prices over the coming months, we believe that the consumers’ purchasing power will continue to fall over the coming months, thereby weighing on consumption,” said the Fitch report.
International market to open for Pakistan after IMF agreement
Contrarily, Minister of State for Revenue Muhammad Hammad Azhar has asserted that the doors of international market would open once the loan agreement is signed with the IMF.
In his talk to a private news channel, he said the government would achieve the tax target set for the next fiscal year.
About the government’s amnesty scheme, he said the response has been very good and a large number of people have availed benefits from the scheme.
He said a programme was being formulated with the Asian Development Bank, under which, a state-of-the-art, transit and cargo facility would be provided at the borders of Torkham and Chaman.
“A central Asian route leading to Gwadar will be opened in next few months,” he added.