Govt's resolve to implement reforms could mitigate economic risks: IMF.

 
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ISLAMABAD -- Slow economic growth, failure to get out of the grey-list are some of the major risks faced by the country in its stabilisation programme under the $6 billion Extended Fund Facility (EFF), said the International Monetary Fund (IMF) on Tuesday.

The risks were highlighted by IMF Resident Representative Teresa Daban Sanchez, while clarifying the confusions around the first review of Pakistan's economic performance under the EFF.

She was speaking at a session organised by the Sustainable Development Policy Institute.

At the outset, Sanchez said that Pakistan's overall macro-economic performance remained satisfactory while revenue collections increased substantially, and there is improvement in the trade deficit and net foreign assets as well.

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She went on to say that although inflation has started to stabilise, high food prices continue to remain a major concern. Owing to stabilisation policies, the government, she said public debt, although at a high level, is sustainable.

While highlighting risks to the programme sustainability, Sanchez said that slower growth could undermine fiscal consolidation strategy and opposition to institutional reforms, which may result in stagnant economic growth and hamper the pass on the benefit from reforms to the population.

The resident representative said failure to get out of the Financial Action Task Force grey-list could have implications on capital inflows to the country. 'Owing to lack of a majority by the ruling party in the upper house, provinces may under deliver on their surplus commitments,' she added.

'The authorities' steadfast commitment to the programme and decisive policy and reform implementation could help mitigate these risks,' she said while adding that close monitoring, with quarterly reviews, which allow for adjustment and improvements coupled with strong support by the international community, in the form of financial assurances and continue calibration and potential scaling up of social spending can help tackle the risks and faster recovery.

Sanchez said that as per the Memorandum of Economic and Financial Policies (MEFP), government is committed to strengthen tax administration and advancing tax policy by eliminating exemptions by FY2021.

She said that a joint working group on harmonisation of...

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