Pakistan Showing Positive Economic Development, Says PM

Prime Minister Shehbaz Sharif of Pakistan has highlighted positive developments in the country's economic indicators, emphasizing progress in implementing painful reforms and privatization initiatives. In a televised address to his cabinet, Sharif noted a rise in exports and remittances within a relatively short period since assuming office.

The International Monetary Fund (IMF) board is set to convene on Monday to consider the disbursement of the second and final tranche of a $3 billion standby arrangement secured by Islamabad last summer to prevent a sovereign default. Pakistan faces a significant balance of payment crisis, requiring $24 billion for debt and interest servicing in the upcoming fiscal year, which is three times more than its central bank's foreign currency reserves.

Pakistan is actively pursuing another long-term, larger IMF loan, with Finance Minister Muhammad Aurangzeb indicating that a staff-level agreement on the new program could be reached by early July. If successful, this would mark the country's 24th IMF bailout.

The IMF-led structural reforms necessitate raising Pakistan's tax-to-GDP ratio from approximately 9 percent to at least 13-14 percent, addressing losses in state-owned enterprises, and managing losses in the energy sector, which amount to trillions of rupees.

Sharif likened the required reforms to a surgical intervention rather than a simple antibiotic treatment, emphasizing the depth of the changes needed to address Pakistan's economic challenges.

Pakistan's finance ministry projects a 2.6 percent growth in the current fiscal year, with average inflation expected to decrease to 24 percent from 29.2 percent in the previous fiscal year. Inflation had surged to a record high of 38 percent in May of the previous year.