The International Monetary Fund has termed Pakistan’s economic outlook favourable thanks to stepped-up Chinese investment in infrastructure projects, estimated growth of 5.3 percent in gross domestic product in 2016-17, improvement in energy supply and introduction of structural reforms. However, economists believe the lending agency has allegedly dented its credibility by quoting wrong figures about the foreign currency reserves of the country. They allege that the fund has overstated the reserves by $3 billion during the outgoing fiscal year and a huge disparity between real and projected growth has marred its own credibility.According to the IMF report, Pakistan’s external financing requirements will rise up to $17 billion during the next fiscal year, but the fund has failed to show any negative effects of loans on the official forex reserves.The State Bank of Pakistan has admitted that the foreign exchange reserves have come down to $15.3 billion and it will be difficult for the government to prop them up to $18.5 billion. Reports suggest the foreign currency reserves are $5.5 billion less than they are projected by the IMF in its 12th review of the Pakistan’s economy.It clearly shows the government as well as the fund are hiding the actual figures of the external accounts.
The government has maintained the foreign exchange reserves by taking expensive loans from everywhere and it will cost heavily to the national economy at the end.During the three-year $6.2 billion extending facility programme,the lending agency projected real picture of the economic performance, including imports, exports, external loans and current account deficit. However, a huge disparity in figures exposed many risks faced by the country. The fund had initially projected the current account deficit at 1.5 percent or $4.5 billion but the revised deficit projection is raised to $9 billion, putting pressure on the foreign currency reserves.
Now the federal budget has been announced and only one week of the current fiscal year is left, many targets have not been achieved. As the country will need nearly $17 billion financial assistance for the next fiscal year, the current account deficit could reach 3.2 percent of the GDP or $10.6 billion. It is hoped the policymakers will shift their attention from acquiring foreign loans to real GDP growth to minimize the financial woes of the country.
