Pakistan’s economic trajectory remains complicated. The optimism about future is intricately linked to effective implementation of rational, tough and robust policies along with much-needed but long-overdue structural reforms. The country signed a 9-month stand-by agreement, approved by the Executive Board of International Monetary Fund (IMF) on July 12. The SBA, amounting to SDR 2.25 billion (approximately $3 billion at approval), was a crucial lifeline for an economy struggling with the burden of external debt.

The SBA conditions lay down a de facto policy guide for Pakistan’s economy, thereby shaping its near future. With a stringent mandate of “no room for slippage or deviation,” the caretaker government has so far diligently adhered to the prescribed economic framework.

This commitment has led to the successful completion of the first review under the SBA. The recent approval by the IMF Executive Board has not only validated it but also unlocked immediate disbursement of SDR 528 million, equivalent of $700 million, providing a significant boost to the foreign exchange reserves.

The IMF has recognised the alleviation of external pressure and the stabilisation of overall economic activity in Pakistan, coupled with a noticeable acceleration. Given the positive trends, it has also highlighted the economic challenges ahead. It is thus emphasising the need for unwavering ownership to ensure that the recent improvements are sustained and ultimately embedded in the economy.

Externally, the government faces a constrained fiscal space. The heightened risks necessitate timely receipt of planned funds from bilateral partners and international lending institutions. The........

© The News on Sunday