IMF country representative identifies Pakistan's economic risks
The International Monetary Fund has identified various risks attached with Pakistan’s economy, including serious implications for capital inflows and financing assurances by multilateral and bilateral lenders if it fails to move out of FATF’s grey list.
“Failure to get out of the grey-list by FATF could have implications of capital inflows to Pakistan and jeopardise the financing assurances under the programme,” said Maria Teresa Daban, the IMF Resident Representative to Pakistan in a presentation at the National Press Club in Islamabad on Monday.
The IMF programme for Pakistan aims to get the country out of the FATF grey list, she added. Under the IMF programme, Pakistan is expecting $38 billion from other lenders in the next three years.
According to the FATF, Pakistan is bound to make progress on the 27-point action plan, including anti-money laundering and anti-terrorist financing measures by August 13, 2019. The FATF’s final review regarding Pakistan is expected in October this year.
The National Assembly’s Standing Committee on Finance recently passed the Foreign Exchange Regulations Amendment Bill, 2019 and the Anti-money Laundering Amendment Bill, 2019, which shows Pakistan’s commitment regarding implementation of the FATF action plan.
The IMF official explained that under the programme, the other goals included debt sustainability, stronger tax collections, a better FBR, an independent central bank, market determined exchange rate regime, moderate inflation trajectory, sustainable and inclusive economic growth, power sector efficiency and better management of State Owned Institutions (SOEs).
She pointed out some other risks involved, including the absence of a majority by the ruling party in the Upper House and possible under performance by the provinces on their commitments regarding surplus funds.
A large amount of rollover is needed for short term debts and fiscal slippages, she said, adding that resistance to fiscal measures and debt sustainability is at risk, besides opposition to governance and institutional building by vested interests.
IMF will take its first quarterly review of Pakistan’s economy before December ends. If the country passes, IMF will release disbursements, she said, while talking about the implementation of the $6 billion IMF programme.