IMF plans to revise Pakistan’s economic projections

ISLAMABAD: The International Monetary Fund (IMF) has decided to tweak its economic forecast, including public debt-to-GDP ratio, for Pakistan based on the country’s fresh fiscal position after a crucial bilateral negotiation scheduled for the next month in Dubai, the Fund said. 

“We are processing the latest fiscal data and plan to revise our macroeconomic projections, including on public debt after the upcoming Article IV consultations with the authorities,” an IMF’s spokesman answered in an email to The News.

The spokesman said the IMF follows the definitions of public debt based on government finance statistics manuals.

Pakistan and the IMF teams are scheduled to hold talks under article IV consultation in Dubai from March 28 to April 5. Minister for finance will be participating at the last round of talks going to be held from April 2 to April 4 to conclude the discussion.

“The upcoming talks under Article IV consultation are crucial for Pakistan as our economic managers will like to get a good health certification on economic front from the IMF after holding next round of parleys,” said an official in the finance ministry.

Sources said the country’s gross public debt reached at the Rs23 trillion mark, but its net public debt burden is much less than this peak. Debt to GDP ratio is hovering around 60 percent.  The sources said the economy has reaped benefits of weak international oil prices, but this position could be reversed if prices start rebounding in the coming months. 

“There is also need to analyse outflows on the account of the China-Pakistan Economic Corridor as profits out of committed investment will start from the next fiscal year and touch its peak from 2019-20 onwards,” an official said. “Proper homework is required to tackle arising challenges on economic fronts in the years to come.”

After the end of three-year $6.67 billion extended fund facility program of the IMF last year, it will be the first time when both the sides are meeting to hold negotiation under Article IV consultation under which it is mandatory for all the member states of the IMF to hold consultation on annual basis so that the Washington-based international lender could gauge the economic health of the borrower country.

Pakistan’s current account deficit surged 120 percent to $5.473 billion during the first eight months of the current fiscal year. The government managed to maintain the foreign currency reserves just a little over $22 billion.  

“Despite upcoming heavy repayments in the coming few months, efforts will be made to maintain foreign currency reserves in the range of $22 to $23 billion,” an official said. “There is no need to worry on basis of each transaction but the overall gross and net debt to GDP ratio is restricted and within our control.”