Immediate Measures Urged To Stop The Economy From Failing
Immediate Measures Urged To Stop The Economy From Failing: The new federal cabinet has emphasized the need for taking immediate corrective measures to stop the economy from deteriorating, but sought some clarifications from the finance ministry before taking steps over the short term.
Interim Finance Minister Dr Shamshad Akhtar gave an overview of the economy to the cabinet. It was the second briefing by the finance ministry in three days as on Monday the ministry presented the synopsis of Pakistan’s fractured economy to caretaker Prime Minister Nasirul Mulk.
Finance Secretary Arif Ahmad Khan had told the PM about the need for getting an International Monetary Fund (IMF) bailout. The caretaker prime minister directed the Finance Division to formulate a comprehensive strategy containing immediate measures as well as a blueprint of long-term structural reforms for consideration of the incoming elected government.
Pakistan’s external account is in a precarious situation as gross official foreign currency reserves have slipped to only $10 billion. The reserves may deplete further due to mounting debt payments and a higher current account deficit. This has raised the prospect of entering into another IMF programme.
“Going to the IMF is one of the solutions, but we cannot give long-term commitments,” added Zafar.
Meanwhile, the World Bank released its Global Economic Prospects report for June 2018 that showed Pakistan’s economy would slow down in the next fiscal year after notching up a high growth of 5.8%.
The GDP growth that was estimated to rise to 5.8% in the current fiscal year will moderate to 5% in 2018-19, reflecting tighter policies to improve macroeconomic stability, according to the World Bank.
The World Bank sees slowdown in economic activities on the assumption that Pakistan could be in an IMF programme, which will require the country to implement tighter monetary and fiscal policies.
The World Bank noted that the monetary policy in South Asia had remained broadly accommodative and supported fast credit growth, but the SBP recently increased its policy rate to reduce growing external pressures.
The Washington-based lender also said along with some other regional countries, Pakistan was also facing the challenge of further deterioration in fiscal balances and continued build-up of debt and widening of current account deficit.
The World Bank sees the global economy leaving the legacy of global financial crisis of the past decade behind. About half of the world’s countries are experiencing an increase in growth.
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