IMF sees “challenging” outlook for Pakistan

Thursday, 24 November 2011 00:00 - - {{hitsCtrl.values.hits}}

WASHINGTON, Nov 22 (Reuters) - The outlook for Pakistan’s economy for the current year ending June 2012 is “challenging,” with global investors more risk averse, the IMF said on Tuesday, adding that ongoing security concerns are likely to limit capital inflows.

The country’s authorities have expressed commitment to implement reforms in an attempt to enhance growth and create jobs, the International Monetary Fund said in a statement after discussions with Pakistani officials.

The meeting was part of an annual economic discussion between the International Monetary Fund and Pakistan, whose $11 billion IMF loan programme ended in September after the country failed to meet fiscal and other targets.

Pakistan’s current account deficit stood at a provisional $220 million in October, compared with a deficit of $1.034 billion in the previous month, the central bank said.

For the July-October period, the deficit stood at a provisional $1.555 billion, compared with $541 million in the same period last year, according to data from the State Bank of Pakistan.

“Pakistani authorities and the mission agreed that containing the budget deficit in 2011/12, a cautious monetary policy, and a responsive exchange rate would reduce vulnerabilities, contain inflation and protect Pakistan’s international reserves,” the IMF statement said.

Pakistan’s foreign exchange reserves stood at $17.03 billion for the week ending Nov. 11, down from a record $18.31 billion in the week ending July 30.

The IMF said discussions focused on reform measures to remove barriers affecting the energy sector and ways to improve expenditure in areas of health, education and infrastructure.

In addition it urged the country to continue steps to broaden access to finance and to reinforce financial sector stability.