Pakistan facing 'significant economic challenges': IMF

Pakistan is facing 'significant economic challenges' due to a weak and unbalanced growth and that its economy is at a critical juncture where it needs an ambitious and bold set of reforms, the IMF has said.

Cash-strapped Pakistan, which currently has a currency reserve of less than USD 8 billion -- enough to cover only 1.7 months of imports -- approached the Washington-based International Monetary Fund (IMF) in August 2018 for a bailout package after the Imran Khan government took over.

The global lender last week formally approved the USD 6 billion loan to Pakistan, which is facing "significant" economic challenges on the back of "large" fiscal and financial needs and "weak and unbalanced" growth.

"Pakistan is facing significant economic challenges on the back of large fiscal and financial needs and weak and unbalanced growth," David Lipton, First Deputy Managing Director and Acting Chair of the IMF Executive Board said.

Last week, the IMF approved the 13th bailout package for Pakistan since the late 1980s.

The latest bailout package is worth USD 6 billion, of which USD 1 billion is to be disbursed immediately and the rest in the next three years.

A decisive fiscal consolidation is key to reducing the large public debt and building resilience, and the adoption of the fiscal year 2020 budget is an important initial step, Lipton said.

Achieving the fiscal objectives will require a multi-year revenue mobilisation strategy to broaden the tax base and raise tax revenue in a well-balanced and equitable manner, he said.