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Friday, 06 February 2015 00:05
Posted by Shoaib-ur-Rehman Siddiqui
ISLAMABAD: Mission Chief of International Monetary Fund (IMF) Jeffrey Franks said Thursday that Pakistani economy was showing good signs and IMF expected that growth forecast of 4.3 percent for this year would be met.
He was talking to mediamen at the conclusion of a three-day round of talks between Pakistan and the International Monetary Fund (IMF) Mission in Dubai.
He said, "We will go to IMF board with this review and when it is approved by the board, the disbursement takes place in late March."
Talking about progress of Pakistani economy, he said, "There were some good signs. There were some headwinds against economic growth which were worrying us in past reviews but fortunately the sharp drop in international oil prices has provided a positive impulse and now we expect growth will meet our previous forecast of 4.3 percent this year."
"For next year, we actually have raised our forecast a bit from 4.4 to 4.7 percent because we think that oil prices will have a positive impact on growth."
Referring to impact of drop in international oil prices on Pakistani economy, Frank said, "We think that it will help the energy problems. It would not resolve the energy problems but it will certainly help."
First of all it will save Pakistan money and it will be paying $ four billion less on oil imports then it would otherwise have to pay, he noted.
"Secondly, as you have more cash you would be able to import more and that would allow more electricity production. The third thing that can happen is that because of this positive shock, the government will try to fix problems of circular debt, problem of subsidies, problem of the companies not having enough cash to function properly to generate the electricity that is needed."
"So if they undertake these policies and they are going forward in that direction, this should permanently help fix the energy problems," he explained.
The IMF Mission Chief said Pakistan's export performance has been affected because of weak growth in other parts of the world.
The Pakistani rupee has remained relatively stable against the US dollar but the dollar has risen sharply against other currencies, he said adding, "What that means is that your competitiveness have been negatively impacted so the government needs to think about policies to address that negative shock to competitiveness from a stronger US dollar."
He said the government met the deficit target because of control on the expenditure.
He said the government collected less revenue because of lower tax on oil imports and fuel sales because oil prices have declined.
"So the government has already taken steps to raise GST on fuel to capture some of that back while still allowing oil prices to be lower than it used to be. We are very supportive of this but this certainly is going to be a negative factor in FBR collections."
Talking about tax reforms, he said, "When we look at the specific steps that are being taken to close tax loopholes and broaden the tax base we see that those are bearing fruit."
Source: Pakistan economy showing good signs: IMF mission chief
