Pakistan has not yet formally approached the International Monetary Fund (IMF) for financial assistance but if bailout talks get underway this week, the goal will be to help Pakistan reach its full potential, the IMF’s chief economist said on Tuesday.
Addressing a news conference at the IMF and World Bank annual meetings in Bali, Maurice Obstfeld said Pakistan is facing financing gaps as it has been hit by a large fiscal and current account deficit, a low level of reserves and a currency he described as ‘too rigid’ and ‘over-valued’.
Obstfeld said that if IMF does enter into talks with Pakistan this week on a possible new financing program, the goal would be reforms that would help Pakistan reach its ‘immense potential’ without providing specific details. “The government has expressed its desires to enact deep structural reforms that might break the cycle of Pakistan needing financial support from the Fund,” he said. Pakistan needs more infrastructure development, Obstfeld added, and the country could benefit from China’s role in supporting its project financing. “It is important that the design of the projects … be solid and excessive debts which cannot be repaid are avoided,” he added.
Published in Daily Times, October 10th 2018.
