Pakistan Requires 2-3 Years for IMF’s Structural Reforms: Finance Minister

Finance Minister, Muhammad Aurangzeb, recently addressed the Atlantic Council think tank in Washington, stating that the country requires a period of two to three years to implement the structural reforms prescribed by the International Monetary Fund (IMF). This statement comes as Pakistan is in discussions with the IMF for a new bailout package.

Aurangzeb emphasized that Pakistan is aware of the necessary measures to maintain economic stability, and the focus now is on the implementation of these reforms. He stated, "We have known the what and why not for years but for decades. It’s time for us to actually start moving the execution of these aspects and why we’re looking for a larger and extended program, so once we get into the execution we will need a two to three-year time period to go through the structural reforms".

The Finance Minister is currently in the US to negotiate with the global lender for a new bailout package and to attend the World Bank meetings. He expressed concern that if Pakistan does not undergo the necessary structural reforms, the country may still be seeking another program.

Aurangzeb also shared his views on Pakistan’s economic outlook for 2024. He stated that the country entered the year in a much better economic shape, largely due to the nine-month Stand-By Arrangement (SBA) program. The overall GDP is moving in the right direction, with the agriculture GDP and services sector performing well. Inflation has decreased from its peak of 37-38%, and the exchange rate is stable. All these factors have steered the country in the right direction.

The Finance Minister also mentioned that the next program’s ownership and sponsorship come from Prime Minister Shehbaz Sharif, who has been vocal about Pakistan entering another program to run with the structural reforms agenda.

When asked about achieving a balanced budget, Aurangzeb stated that the under-taxed and untaxed sectors need to be brought into the net. He also mentioned the need for end-to-end digitalization of the tax authority to minimize human intervention.

In recent news, the State Bank of Pakistan repaid USD 1 billion in Eurobonds as the country prepares for a new long-term bailout from the IMF. The IMF’s review mission will determine the specifics of the bailout package, considering Pakistan’s vulnerability to climate degradation and the need for international support.

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