Achi news desk-
Over the next few years, Pakistan will likely be stuck in low growth mode. According to foreign lenders, the nation’s economic growth will remain calm and likely to vary from 1.8 to 3.5 percent over the medium term due to a reduction in investment, continued fiscal and external imbalances, and the significant role of the state in the sector.
Pakistan’s economy is expected to grow by 2 percent this year and 3.5 percent next, according to the IMF’s flagship World Economic Outlook 2024, released on the eve of the spring meetings of the World Bank Group. Based on the Fund’s recently completed assessment of Pakistan’s macroeconomic situation under the $3 billion Contingency Arrangement, the estimates have been made. Even these estimates depend on further budgetary contraction and a new bailout from the IMF. It makes sense that Muhammad Aurangzeb, the finance minister, was in Washington to advocate for a more expansive three-year fund program worth $6–8 billion to aid the proposed economic reforms.
The nation would require a three-year program “to help implement the structural reform agenda,” as he noted. He claimed that the mood of the market was more optimistic in the current financial year, noting less volatility in the market and economic stabilization brought about by the SBA. “We have started the conversation with the Fund to start a bigger and longer program mainly for that reason,” he explained.
If authorized, Pakistan will have worked with the IMF 24 times since 1958. Will this new initiative put an end to the “chain of financial struggles and bailouts” mentioned by the minister?
The truth is that Pakistan has never been able to finish a longer plan with the Fund because of political reasons that cause a policy goal to be broken. What will be different this time? So far, the minister has shown an appreciation of the problems that have hampered the economy and a firm determination to carry out long-awaited structural reforms without any warnings. He said during a meeting of the Atlantic Council, “Unfortunately, we will still look at another program if we do not succeed in getting the structural reforms. He said Pakistan does not need “too many policy instructions” and understands what needs to be done. The nation is aware of the issues and what must be done to stabilize the economy. Action and follow through is a barrier. The budget for the coming year will likely show how robust the administration will be in implementing changes and how Mr Aurangzeb strikes a balance between stabilization and relatively higher growth at a time when the economy is experiencing its worst crisis.
Unlike his predecessors, Mr Aurangzeb plans to talk to the IMF about the “growth aspects” of the project. He has not, however, provided details on how he intends to expand the economy without going against the program’s policy directives, which must focus on strict stabilization measures.
