The International Monetary Fund (IMF) projected core inflation of 12.4 percent on Monday, a budget deficit of 7.4 percent and an increase in debt despite better revenues in the FY20 program.
As per the informed sources, the IMF visiting mission had some fundamental discussions on the first quarter (July-Sept) data on revenue collection, its liquidation and the causes for a shortfall of around Rs 113 billion. Both sides also touched on forecasted Revenue by December of this year based on first-quarter performance and the way in which the deficiencies to be addressed.
The two sides will continue to collaborate in technical discussions and share the data across all sectors of the economy by this weekend, and then hold talks at the higher level, which will be led by the adviser to the Prime Minister for Finance and Revenue, Dr. Abdul Hafeez Shaikh.
Gross reserves would remain in the existing band by 2020 or $25.9 billion as compared with $25 billion in 2019 and $24 billion in 2018. On the other hand, foreign exchange coverage would improve to 2.2 months of imports in 2020, against 1.4 months in 2019 and 1.9 months in 2018.
The IMF has advised oil-importing countries including Pakistan to boost growth and promote structural reforms to attract investment, including foreign direct investment, to achieve growth-friendly fiscal consolidation, increase inclusion and strengthen the business environment.
Development in the oil-importing countries of the MENAP region is likely to be restrained in the coming years. The high level of public debt and the associated financing costs not only slow down growth in the region but have also become a source of acute fiscal stress.