Washington, Nov 30: The International Monetary Fund (IMF) has urged Pakistan to reduce its large budget deficit to boost the struggling economy’s resiliency.
According to the IMF, Pakistan’s growth remains too weak, underlying inflation is high and the trade balance is heading in the wrong direction, reports The Express Tribune.
“The situation is compounded by an uncertain global environment and a difficult domestic situation, as well as adverse effects of natural disasters,” said the IMF.
For the third year in a row, Pakistan has been hit with severe flooding that has impacted millions of people and damaged economic growth.
Weak financial inflows and debt repayments have led to a decline in the central bank’s foreign exchange reserves to under 10 billion dollars in October, below adequate levels, the IMF stated.
“Directors underscored that reducing the large fiscal deficit is essential for restoring macroeconomic and external stability,” it said.
The IMF directors called on Pakistani authorities to undertake short-term efforts to broaden key taxes and reduce subsidies, while protecting the most vulnerable.
Pakistan had a 10.7 billion dollar IMF loan until September, but had drawn only about a third of it. The government has indicated it would not seek a new loan. (ANI)