By Lalit K JhaWashington, Dec 15 (PTI) The International Monetary Fund(IMF) today projected a 5.6 per cent growth rate forPakistan's economy in the current year.
It attributed this to improved security conditions,energy supply, infrastructure investment, and agriculture.
The IMF's statement comes shortly after the visit of itsofficials to Pakistan.
The IMF Mission visited Pakistan from December 5-14.
Maintaining this positive trend will requirestrengthening the economy's resilience with greater exchangerate flexibility, fiscal discipline, and an adequately tightmonetary policy stance, the IMF said.
"Strengthening the economyÂ’s resilience will be importantto maintain PakistanÂ’s favorable growth momentum and ensuresustainable private investment and job creation in the mediumterm," Harald Finger, who led the IMF staff mission toPakistan.
"While economic growth has been accelerating andinflation remains subdued, Pakistan is facing important near-term economic challenges," he said.
Surging imports have led to a decline in internationalreserves despite higher external financing, he noted, addingthat the increase in the fiscal deficit last year has added tothese trends.
"Intercompany arrears in the power sector continue toaccumulate and need to be addressed decisively," Finger said.
"While the authorities have taken steps to address thesechallenges, greater efforts are required to prevent a furtherbuild-up of vulnerabilities and preserve PakistanÂ’s hard-wonmacroeconomic stability," he said.
Finger welcomed the recent move by the State Bank ofPakistan to allow adjustment of the exchange rate, sayingcontinued exchange rate flexibility will be important in theperiod ahead.
"Continued exchange rate flexibility in the period aheadwill be important to facilitate external adjustment in supportof exports and economic growth.
"Alongside, fiscal discipline and an adequately tightmonetary policy stance are needed to reverse the widening ofexternal imbalances," he said.
The IMF called for a strong reform effort to maintainexternal stability, ensure debt sustainability, and supporthigher and more inclusive growth in the medium term forPakistan.
"This includes pursuing medium-term fiscal consolidationdriven by accelerated efforts to broaden the tax base,strengthening the monetary policy framework and autonomy ofthe SBP, careful phasing in of new external liabilities tocontain external stability risks, eliminating the losses ofpublic sector enterprises, improving the business climate, andcontinued strengthening of the financial sector," said Finger.
PTI LKJCHT.
This is unedited, unformatted feed from the Press Trust of India wire.