(REUTERS): Governor State Bank of Pakistan (SBP) Dr Reza Baqir has announced that the country was in talks with the International Monetary Fund (IMF) to put the fiscal support programme back on track.
“We hope to have good news for the market and the world that we are putting the program back on track,” Dr Reza Baqir said in an interview. He said he was optimistic about the economic outlook despite the fallout from the coronavirus pandemic.
With dwindling foreign exchange reserves and a struggling economy, Pakistan entered a three-year $6 billion IMF bailout program in 2019, but is yet to have its second review approved, which has been pending since early last year.
Pakistan’s economy contracted 0.4% in the last fiscal year ended June 30, 2020, as the pandemic disrupted activity. During the interview, Reza Baqir asserted that there was no disagreement on the end goal between the two sides, and that Pakistan needs to increase its low tax-to-GDP ratio.
Pakistan and the IMF have been working to implement IMF-supported economic reforms, in particular tax collection, aimed at stabilising the economy and shoring up a yawning fiscal deficit.
Meanwhile, Pakistan also received $1.4 billion in emergency financing from the IMF to allow it to fund targeted and temporary spending increases aimed at containing the pandemic and mitigating its economic impact.
“We are prepared for the challenges that may come about. We are already in the middle of COVID-19 without any vaccine and once the vaccine comes, it will only make this better,” he added.
Baqir added that an economic recovery is underway and the bank’s job is to support the rebound until a vaccine is available. “We are aiming to achieve 1.5% to 2.5% GDP growth in the current fiscal year,” he said, adding, “I think the next two or three years should bring some good news on the economic front.”
