IMF Chief Warns of Stricter Loan Conditions for Pakistan

In an interview with Voice of America, Nathan Porter, the IMF Mission Chief for Pakistan, stated that the new loan program from the IMF is significantly more stringent, suggesting that if Pakistan successfully implements necessary reforms, this could be the final program from the Fund.

Porter noted that during the previous program, Pakistan faced high inflation, a considerable current account deficit, and minimal economic growth. “We managed to stabilize the situation through subsidies and concessions, but this approach rendered businesses less effective,” he explained.

He further commented that such measures tend to diminish growth prospects. Emphasizing the need for sustainable economic development, Porter advocated for growth that does not rely on excessive incentives or concessions. In a recent event, he reaffirmed the IMF’s support for domestic and foreign investments, asserting that the government’s primary focus should be on providing essential infrastructure and cultivating a skilled labor force for businesses.

Reflecting on Pakistan’s economic developments, Porter recognized the substantial stability achieved over the past year, despite the volatility and uncertainty experienced in mid-2023. “The changes have happened swiftly, establishing a solid foundation for future progress,” he remarked.

He also highlighted the importance of maintaining a strong exchange rate and implementing robust financial and monetary policies to prevent the cyclical patterns of growth and decline that have historically affected the country. Porter emphasized that fostering economic growth through the private sector while reducing economic restrictions would be crucial for Pakistan’s long-term development.

He hinted that the ongoing IMF program might be the last for Pakistan if the country continues to pursue economic stability and self-reliance.

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