ISLAMABAD -- International Monetary Fund (IMF) Resident Representative for Pakistan Teresa Daban Sanchez on Tuesday said that country's slow economic growth and inclusion in FATF's grey-list remained major stumbling blocks in the way of loan programme.
'The country's name continues feature in FATF's grey list, which could have implications for capital inflows to Pakistan,' she said during a conversation with relevant stakeholders on the occasion of first quarterly review of 39-month arrangement made for Pakistan under the EFF.
The event was organised by the Sustainable Development Policy Institute (SDPI).
She further said that Pakistan's overall macro-economic performance remained satisfactory, since revenue collections had increased substantially, and there was improvement in the trade deficit and net foreign assets.
Teresa said that though inflation has started to stabilise, but food price inflation continued to be a major concern. 'Owing to stabilization policies of the government, public debt, although at a high level, continues to be sustainable,' she noted.
She further said there was a successful transition towards a market-based exchange rate regime by the government which helped increase foreign exchange reserves. 'The government has also been successful in controlling expenditures with the help of new public finance management law and by avoiding borrowing from the central bank. However, economic activity is softening as the economy adjusts to new stabilization policies,' she added.
Teresa, while highlighting the risks to the programme's sustainability, said that slow economic growth could undermine the programme's fiscal consolidation strategy and opposition to institutional reforms, which may result in stagnant economic growth and hamper the population to benefit from the reforms. 'Since the ruling Pakistan Tehreek-e-Insaf (PTI) is not in majority in the upper house, provinces may under deliver on their surplus commitments,' she apprehended.
'The authorities' steadfast commitment to the programme, decisive policies and reform implementation could help mitigate these risks,' she said...