IMF says Pakistan at high risk of economic crisis
Reuters September 13, 2013, 1:08 am
ISLAMABAD (Reuters) - The International Monetary Fund gave Pakistan a sobering assessment on Thursday, saying its economy was at a high risk of deteriorating into crisis and growth was too slow to significantly improve people's living standards.
The global lender has approved a $6.7 billion (4.2 billion pounds) loan package to help the South Asian nation revive its ailing economy, rebuild reserves and prevent a balance of payments crisis.
"Economic performance in Pakistan has been substandard in recent years," the IMF said, adding that gross domestic product growth averaged only 3 percent over the past five years.
"Executive directors noted that Pakistan's economic vulnerabilities and crisis risks are high, with subpar growth and unsustainable fiscal and balance of payments positions."
Pakistan averted a balance of payments crisis in 2008 by securing a $11 billion IMF loan but that was suspended two years ago after economic and reform targets were missed.
Chronic gas and electricity shortages, violent crime and a Taliban insurgency have all hampered growth and contributed to falling foreign investment in Pakistan.
"A lack of reliable electricity supply and a difficult security situation in large parts of the country have contributed to the deterioration," the IMF said, while welcoming the new government's economic reform programme.
The Pakistani rupee currency depreciated about 5 percent against the dollar during the 2012/13 fiscal year. A decade ago annual economic growth rates were about 10 percent.
To secure the latest programme, Pakistan had to fulfil conditions set by the IMF, including slashing costly subsidies on electricity and sending out notices to 10,000 delinquent taxpayers.
(Reporting by Maria Golovnina; Editing by Kim Coghill)
