After successful negotiations with the International Monetary Fund (IMF), which led to the resumption of a $6 billion loan facility that had been stalled since 2019, Finance Minister Shaukat Tarin now looks to end Pakistan’s reliance on the multilateral lender by means of sustainable economic growth of five per cent to six per cent.
Late on Wednesday night, Tarin announced on Twitter that the IMF had approved the completion of the sixth review of its programme for Pakistan under the Extended Fund Facility, which allows for an immediate disbursement of about $1 billion to the country.
“I think this programme should be enough,” Tarin told Bloomberg in Islamabad during an interview published on Thursday.
“If we start generating five per cent to six per cent balanced growth, which means sustainable growth, then I don’t think we need another IMF programme,” he said.
He expressed the hope that the country’s economy would grow at a rate of 4.5-5pc in the current fiscal year, despite commodity price shocks in the international market, and that the growth rate would increase to six per cent in the next fiscal year.
Tarin said he thought that the growth was overshooting at the start of the current fiscal year as exports were high, remittances had increased, tax collection had gone up by 32pc to 35pc, the utilisation of electricity had gone up by 13pc and corporate profits were at a historic high.
“I thought we will be doing more than five per cent, but given the fact that last year’s growth rate has comes now, with the rebasing of the economy, at around 5.57 per cent, we could be a bit lower than five … But it (growth rate) could be between 4.5pc to five per cent,” he said.
However, the IMF has said Pakistan’s economy is set to keep on recovering in fiscal year 2022, with real gross domestic product (GDP) growth projected at four per cent.
The finance minister also told Bloomberg that he was targeting a budget shortfall of five per cent to 5.25pc of the GDP in the fiscal year starting on July 1.
Tarin further said he planned to raise $1bn via an ESG-compliant Eurobond in March, which would follow a similar amount of Sukuk last week.