An International Monetary Fund (IMF) mission, led by Ernesto Ramirez Rigo, visited Islamabad and Karachi during September 16–20, 2019 to take stock of economic developments since the start of the Extended Fund Facility (EFF) and discuss progress in the implementation of economic policies.
A full mission for the first review under EFF, is planned for late-October. At the conclusion of the IMF staff visit, Ramirez Rigo issued the following statement:
While the authorities’ economic reform program is still in its early stages, there has been progress in some key areas. The transition to a market-determined exchange rate has started to deliver positive results on the external balance, exchange rate volatility has diminished, monetary policy is helping to control inflation, and the State Bank of Pakistan (SBP) has improved its foreign exchange buffers.
There has been a significant improvement in tax revenue collections, with taxes showing double-digit growth net of exporters refunds. Moreover, the Federal Board of Revenue (FBR) is undertaking significant steps to improve tax administration and its interface with taxpayers.
Staff and the authorities have analyzed the worse than expected fiscal results of FY2018/19, which were partially the result of one-off factors and should not jeopardize the ambitious fiscal targets for FY2019/20. Importantly, the social spending measures in the program have been implemented.
The near-term macroeconomic outlook is broadly unchanged from the time of the program approval, with growth projected at 2.4 percent in FY2019/20, inflation expected to decline in the coming months, and the current account adjusting more rapidly than anticipated.
However, domestic and international risks remain, and structural economic challenges persist. In this context, the authorities need to press ahead with their reform agenda.
In order to complete the first review, an IMF staff team plans to return to Pakistan in late-October to assess the end-September program targets.