- The current account deficit in Pakistan has reached $13.2 billion.
- According to an IMF official, the team will assess the new government’s policy priorities.
- Pakistan has requested an increase in the size of its $6 billion IMF loan.
IMF officials told Pakistan to cut back on its current account deficit, as the country’s new government wants to increase the size and length of its current IMF loan deal.
Pakistan’s current account deficit widened to $13.2 billion in the first nine months of its fiscal year from $275 million a year earlier, official data showed. The increase was attributed to rising oil import costs.
Moody’s expects Pakistan’s fiscal deficit to increase to 5–6 percent of gross domestic product in the current fiscal year ending June 30, up from its previous forecast of 4%, putting greater pressure on the country’s foreign reserves.
The IMF’s Jihad Azour, director of the Middle East and Central Asia Department, told Reuters that the fund’s team will assess the new government’s policy priorities and the economic impact of the Ukraine war.
However, we have been stressing the importance of maintaining a balanced current account over the last few months.
He didn’t say more about what he was going to do, but the IMF said that keeping the exchange rate set by the market and having a good macroeconomic policy mix would help cut the deficit.
Pakistan’s new government, which took over from ousted Prime Minister Imran Khan this month, faces huge economic problems. By the end of this fiscal year, the fiscal deficit is expected to be more than 10% of GDP.
Pakistan has requested an increase in the size and duration of its $6 billion IMF programme, Finance Minister Miftah Ismail said Monday.
When asked if Pakistan needs to take specific steps first, such as reducing oil and gas subsidies, Azour stated that these issues will be discussed during the visit. As a result, he said, “We’ll discuss these issues, and as a result, I’m not going to preempt them.”