ISLAMABAD: Taking notice of plunging into severe slowdown, Prime Minister Imran Khan has directed his economic team to prepare a roadmap for revival of national economy aligned with IMF conditions to kickstart sluggish economic activities.
The independent economists are expressing their apprehensions that Pakistan is moving towards stagflation where the stabilisation programme under tight nose of IMF scrutiny will result into rising inflation, losing of jobs and increasing poverty.
“The Egyptian model on economic front is under implementation in Pakistan in guise of IMF programme under which poverty and unemployment is bound to rise,” said one economist while talking to The News here on Friday.
In the wake of increasing imbalances on the fiscal front, the PTI-led government is heading towards limited options to run the IMF programme successfully on the eve of upcoming review in the aftermath of July-September performance as either the government will have to come up with mini-budget or to further slash down the development programme in order to meet performance criteria on primary deficit target.
“Yes, the PM has directed Adviser on Finance Dr Abdul Hafeez Shaikh to come up with economic revival plan completely aligned with the IMF programme so the sluggish economic activities could be kick-started at full pace,” top official sources confirmed to The News here on Friday.
The economic team is scheduled to meet PM again on Saturday (today) to apprise him on identified priority areas so far under proposed plan to cater to the requirements of different sectors of the economy.
When contacted, former finance minister Dr Hafiz A Pasha on Friday said that the current account deficit curtailed but the rising budget deficit was matter of severe concern for all. He said that the IMF bound Pakistan to bring down primary balance to 0.6 percent of GDP in the current fiscal year from projected level of 1.8 percent of GDP.
Now the latest estimates, he said, were suggesting that the budget deficit might escalate to 9 percent of GDP with primary deficit standing in the range of 3.5 to 3.8 percent of GDP. He questioned how such massive fiscal adjustment would be materialised in the range of over 3 percent of GDP, which would be impossible to achieve in anyway.
He said that there were severe capacity constraints being faced by the Ministry of Finance as all of their projections made on eve of budget had shattered and there was no clue how the IMF programme would be implemented in such prevailing conditions.
However, when contacted, Minister for Economic Affairs Hammad Azhar on Friday said that the government achieved success on curtailing the current account deficit in the aftermath of implementing stabilisation programme as the tightening of monetary and exchange rate policies had started yielding desired results.
He said that the import of machinery reduced by $2 billion mainly because of CPEC front because the electricity and infrastructure projects were nearing completion so one off imports got reduced.
He said that the imports of luxury items got reduced where the government imposed regulatory duty in last October 2018. He said that fiscal situation would improve in coming years as on short-term basis the objective was to slash down the current account deficit.