IMF cites Pakistan as model for debt, growth and reform drive
ISLAMABAD: The International Monetary Fund (IMF) has cited Pakistan as a successful example of its joint three-pillar approach with the World Bank to promote sustainable debt, stronger growth and reforms, particularly through improved domestic resource mobilisation and effective liability management operations aimed at attracting greater private-sector inflows at lower cost. This has been noted…
The International Monetary Fund (IMF) has highlighted Pakistan as an illustration of its collaborative three-pronged strategy, in partnership with the World Bank, aimed at fostering sustainable debt, bolstering growth, and implementing reforms. This approach emphasizes the enhancement of domestic revenue generation and the effective management of liabilities to attract private investments at reduced expenses, as stated by IMF Managing Director Kristalina Georgieva at the conclusion of the G20 Finance Ministers and Central Bank Governors meeting in Asheville, North Carolina.
Georgieva emphasized that accelerating the implementation of the IMF-World Bank Three-Pillar Approach to assist countries in achieving sustainable debt and pursuing growth-enhancing reforms is a top priority. She, along with the World Bank, has bolstered support for countries in the implementation of reforms and domestic resource mobilization, and continues to explore methods to motivate higher private sector investments at lower costs.
This strategy has proven effective in nations such as Ecuador and Pakistan. Georgieva also emphasized that the sovereign debt environment for emerging and low-income countries has seen gradual improvement in recent years, thanks to domestic policy initiatives and international cooperation. However, progress has been inconsistent, and persistent risks and uncertainties in the global economy, including the sharp rise in yields in advanced economies, necessitate strict adherence to policies and underscore the critical need to build buffers.
The surge in interest rates poses a significant concern, as the escalation of key advanced economy yields to multi-year highs raises most global yield curves, in some emerging markets, exceeding the hard-earned spread compression. Georgieva disclosed that these challenges are exacerbated by a substantial drop in net external financing, marked reductions in official development assistance, and a significant decrease in new inflows from non-Paris Club creditors.
She stressed that aiding countries in creating fiscal space for growth-enhancing expenditures is even more critical in the current context.
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