Pakistan is seeking another long-term IMF programme to support its ailing economy, but experts emphasize that the focus must be on implementing reforms. Despite receiving a $1.1bn loan tranche from the IMF, economists warn that Pakistan needs to reduce its reliance on foreign financial assistance through deep structural changes.
The approval for the loan tranche was accompanied by a stern message from the IMF, urging Pakistan to adhere to fiscal targets, adopt a market-determined exchange rate, and implement structural reforms to promote sustainable growth.
The recent bailout comes after a meeting between Pakistani Prime Minister Shehbaz Sharif and IMF Managing Director Kristalina Georgieva, and follows the expiration of the previous $3bn standby arrangement with the IMF in April.
While the current economic indicators suggest stability, economists like Kaiser Bengali are skeptical about the sustainability of the current policies. Bengali emphasizes the need for more structural reforms to address Pakistan’s mounting external debt obligations and inflation concerns.
Reflecting on Pakistan’s economic challenges, experts like Hina Shaikh warn against relying on debt to address fiscal deficits, calling for a shift towards productivity and investment-driven growth. With external debt exceeding $130bn, the urgency for reforms to ensure long-term financial stability is paramount.
Despite the immediate relief provided by the IMF loan, experts caution that continued reliance on loans without substantial reforms could deter future financial assistance. It is crucial for Pakistan to prioritize structural changes to foster sustainable economic growth and mitigate its financial crisis.