Washington: Global ratings agency Moody’s has said an International Monetary Fund (IMF) program would prove to be helpful for the new Pakistani government.
“An IMF program will also provide crucial policy support and technical assistance to the recently elected government, led by Prime Minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party, in advancing its structural reform agenda,” Moody’s said.
“The government has pledged a reform-based policy agenda, including raising economic competitiveness through pro-business policies, addressing corruption issues, reforming state-owned enterprises, enforcing greater discipline in government spending and broadening the tax base,” it added.
The ratings agency highlighted,
ۘ“An IMF program would be credit positive for Pakistan because access to a cheap, stable source of external financing would provide immediate support to the government’s external financing needs.”
“Additionally, support and technical assistance from the IMF would aid macroeconomic rebalancing and the government’s structural reform agenda,” it continued.
However, Moody’s warned that external and fiscal challenges remain, particularly in light of investments, imports and external borrowing related to projects under the China-Pakistan Economic Corridor (CPEC).
Macroeconomic and external imbalances have risen since the country’s previous IMF program finished in 2016, the ratings agency pointed out. “In particular, foreign exchange reserves adequacy has fallen to low levels, sufficient to cover barely two months of goods imports and below the IMF’s minimum adequacy threshold of three months,” it explained.