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IMF: Pakistan Bailout Sets Ambitious Fiscal Targets

Reuters

   ISLAMABAD - The $6 billion loan package for Pakistan approved by the
   International Monetary Fund last week will require "very ambitious"
   fiscal measures and sustained commitment for the bailout to succeed,
   IMF officials said on Monday.

   The three-year agreement approved by the IMF board last week,
   Pakistan's 13th bailout since the late 1980s, has seen a sharp drop in
   the value of the rupee currency after the central bank agreed to a
   "flexible, market-determined exchange rate."

   It also foresees structural economic reforms and a widening of the tax
   base to boost tax revenues that are currently estimated to account for
   less than 13% of gross domestic product (GDP) by 4-5 percentage points.

   With slowing growth, a budget deficit which has climbed to more than 7%
   of GDP and currency reserves of less than $8 billion, or enough to
   cover 1.7 months of imports, Pakistan has teetered on the edge of a
   debt and balance of payments crisis.

   Ernesto Ramirez Rigo, the Fund's mission chief for Pakistan said the
   program targets were tough but Prime Minister Imran Khan's government,
   which came to power last year vowing not to turn to the IMF, was
   committed.

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