Sources further stated that the IMF Mission was further told that there was improvement in exports growth due to the export package while regulatory duty on imports and correction in exchange rate will contribute to contraction in overall current account deficit. The improvement in remittances was also mentioned during the discussion, they added.
The sources acknowledged that the IMF is aware of Pakistan''s current economic situation and proposed devaluation of 20 percent in rupee against dollar. However, Finance Ministry did not agree to their proposal because the window of 20 percent was quite big.
They said the government has allowed correction in rupee against dollar by taking into consideration the happenings in imports and exports, investment in stock market as well as other related factors in the external sector. Market will determine rupee''s adjustment against dollar by next week, they added.
Sources on condition of anonymity said that commercial borrowing will be the last option to support the balance of payment position if pressure on the external sector in the coming months persists.
The visiting Fund Mission held various rounds of technical level discussions with the Pakistani side during the last week. Secretary Finance Shahid Mehmood shared with the IMF delegation an overview of the economy, stating that it is on track and key economic indicators are moving in the positive direction. The secretary who led the Pakistani side stated that Pakistan has achieved fiscal consolidation without compromising on development expenditure and social protection.
The post-programme monitoring discussions covered a host of areas ranging from macroeconomic situation to energy, fiscal, financial, monetary and social sectors. He further maintained that the government is eying on 6 percent inclusive, pro-poor and sustainable GDP growth. The secretary finance also briefly mentioned successful launch of Sukuk and euro bonds with the IMF delegation.
The IMF delegation also met with Tariq Bajwa, the Governor State Bank of Pakistan, on Friday and over the week, the mission also held meetings with the officials of Ministries of Commerce and Railways, Pakistan Bureau of Statistics (PBS), OGRA and SECP. The mission also met with the senior officials in other ministries including Energy, Planning Development and Reforms, State Bank of Pakistan, Federal Board of Revenue, BISP and NEPRA and held technical discussions on key areas.
The Post-Programme Monitoring is an annual feature of the Fund whereby overall economic conditions of a member country, which is no more in a program relationship and owes funds to the IMF, are monitored and a report is presented to the Executive Board of the Fund. The last IMF mission level visit to Pakistan took place in late 2013. The current visit is taking place after a gap of over 3 years, reflecting improved security conditions as well as the economic performance of the country and growing trust of the international community.
Copyright Business Recorder, 2017