ZUBAIR QURESHI
ISLAMABAD Resident Representative of the International Monetary Fund (IMF) Maria Teresa Daban Sanchez has appreciated the government’s timely response to Covid19 challenge and the country’s capacity to absorb coronavirus-related socio-economic shocks. While speaking at an online policy dialogue titled ‘IMF support to Pakistan under RFI, Existing EFF Programme, & Debt Rescheduling’ organized by the Sustainable Develop ment Policy Institute (SDPI) here on Monday, she said Pakistan’s economy prior to the emergence of Covid-19 and its devastating impacts, was on the right track and the IMF was quite happy the way Pakistan was implementing different policies to achieve fiscal consolidation and macroeconomic stability and would continue to provide its support to the country to face the socio-economic challenges posed by COVID19. Sanchez apprised the audience of the IMF toolkit to fight the COVID-19 shock that includes the Rapid Finance Instrument which Pakistan will be utilizing. She noted that the IMFs assessment of the situation says that COVID 19 would reverse the decline in public debt that resulted from fiscal consolidation efforts. This would also result in increase of primary deficit. She was also all praise for cash transfers to most vulnerable families, lowering down policy rate, eliminating import duties on several items, and other initiatives to provide relief for the low income segments of society. Commenting on opening up of Construction sector, she said IMF supported opening of labour intensive sector where daily wagers may be absorbed. However, she hoped that amnesty announced for investment in construction sector is temporary in nature, and would be withdrawn once situation becomes normal. She said that ongoing existing fund facility (EFF) program is very much intact. IMF is working closely with the authorities in Pakistan and the next review mission may take place virtually. Regarding the EFF, she said, as the medium term economic outlook is changing, we have to recalibrate everything from targets to trajectories. However, we need to continue working on EFF as a framework as the program provides continuity along with a healthy and sustainable trajectory from an economic point of view. “It is encouraging that the GOP is committed to fiscal consolidation and reforms once the things get normal”, she added. While commenting on the overall impacts of Covid-19 on Pakistan’s economy, she said that there would be a significant cut in imports in Pakistan from various countries, the remittances would get reduced, tax collection would reduce considerably and the grow th rate may get reduced to -1.5pc.
