ISLAMABAD: Finance Minister Miftah Ismail and Minister of State for Finance Dr Ayesha Ghous Pasha are leaving for Washington today (April 20) to hold talks with the IMF for loan and to attend the annual meetings of the IMF and World Bank.
The foremost priority of the new government is to secure IMF loan as foreign exchange reserves of the country are eroding consistently. In the last four weeks, Pakistan’s foreign exchange reserves have dropped by $5 billion because of debt servicing.
Miftah Ismail’s one of the important meetings would be at the US Treasury Department, as Pakistan wants to improver ties with the world’s largest economy, damaged by immature public statements by former prime minister Imran Khan.
The federal cabinet, led by Prime Minister Shehbaz Sharif, today held its maiden meeting to discuss economic and political situation in the country. The cabinet also discussed strategies to get loans from IMF, China and Saudi Arabia.
Meanwhile, the Pakistan Development Update – the biannual report issued by the Washington-based lender, said that soaring inflation disproportionally affected poor and vulnerable households that spend a relatively larger share of their budget on food and energy.
The World Bank said that the poor in Pakistan are spending around 50% of their total income on food items. The WB report further said that Pakistan’s key indicators were further deteriorating in the current fiscal year, seeking urgent measures to tighten the fiscal belt for ensuring debt sustainability.
Poverty measured at the lower middle-income class poverty line of $3.2 Purchasing Power Parity line of 2011 per day was estimated at 34% in the last fiscal year. The ratio was 37% in the preceding year.
The WB said that the inflation was estimated to rise to an average of 10.7% in fiscal year 2021-22 as against the target of 8%, reflecting higher oil and commodity prices. Headline inflation in Pakistan was the highest in South Asia, where the regional average was 6% during the first half of the current fiscal year. It added energy inflation reached 25.1% on a yearly basis in urban areas and 22.6% in rural areas in the current fiscal year.
The IMF and the WB believe that the current significant imbalances in the external sector and low external buffers, macroeconomic adjustment, specifically fiscal consolidation to complement ongoing monetary tightening need urgent attention.
