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pM Shehbaz: Pakistan’s economic condition shows improvement, but ‘needs surgery’

ISLAMABAD: Prime Minister Shehbaz Sharif stated on Friday that Pakistan’s economic indicators are displaying positive trends, with plans for rigorous reforms and privatization progressing as scheduled. This statement came ahead of an IMF board meeting scheduled to deliberate on a $1.1 billion funding package for the country.

During a live telecast address to his cabinet, the prime minister highlighted a rise in exports and remittances within just a month and a half since his government assumed office.

The IMF board is set to convene on Monday to decide on the release of the second and final installment of a $3 billion standby arrangement that Islamabad secured last summer to prevent a sovereign default.

Facing a persistent balance of payment crisis, Pakistan is confronted with a need to allocate $24 billion for debt servicing and interest payments in the upcoming fiscal year starting July 1 – a figure three times larger than the foreign currency reserves held by its central bank.

In light of these challenges, the South Asian nation is actively pursuing another long-term, larger loan from the IMF.

Pakistan’s Finance Minister, Muhammad Aurangzeb, has indicated that Islamabad may reach a staff-level agreement on the new program by early July. If successful, this would mark the 24th IMF bailout for Pakistan.

The IMF-led structural reforms entail Pakistan increasing its tax-to-GDP ratio from approximately 9% to at least 13%-14%, curbing losses in state-owned enterprises, and addressing the substantial losses in its energy sector, which amount to trillions of rupees.

“It’s not just a matter of applying antibiotics anymore. It requires surgical intervention,” remarked Shehbaz Sharif.

Pakistan’s finance ministry anticipates economic growth of 2.6% in the current fiscal year ending in June, with average inflation projected to be at 24%, a decrease from 29.2% in fiscal year 2023/2024.

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