International Monetary Fund not formally approached by Pakistan for financial assistance: chief economist

Punjab CM Usman Buzdar welcoming PM Imran Khan. — PTI

Punjab CM Usman Buzdar welcoming PM Imran Khan. — PTI

The country's Gross Domestic Product growth rate accelerated to 8.2% in the first quarter of 2018-'19.

The IMF-World Bank meeting is an annual summit to discuss global financial and economic issues, including global economic outlook, poverty eradication, and aid effectiveness.

This acceleration, the world body said, reflected a rebound from transitory shocks (the currency exchange initiative and implementation of the national Goods and Services Tax), with strengthening investment and robust private consumption.

"The provision of 10 million jobs and millions of housing units might become the victims as it will become hard to pursue the projects under the tight noose of the International Monetary Fund scrutiny", said one independent economist and added that the International Monetary Fund would pursue one shoe fit for all policy under which the sacrosanct targets of budget deficit and current account deficits would be curtailed by comprising growth and hiking inflationary pressures. "India's medium-term growth prospects remain strong at 7.75%, benefiting from ongoing structural reform, but have been marked down by just under 0.5 percentage point relative to the April 2018 WEO", it said.

"Notwithstanding the present demand momentum, we have downgraded our 2019 United States growth forecast owing to the recently enacted tariffs on a wide range of imports from China and China's retaliation". The 0.2 percentage point downgrade to the 2019 growth forecast is attributable to the negative effect of recent tariff actions, assumed to be partially offset by policy stimulus, it said.

Noting that growth in the United States, buoyed by a procyclical fiscal package, continues at a robust pace and is driving USA interest rates higher, Obstfeld said U.S. growth will decline once parts of its fiscal stimulus go into reverse. "Looking ahead, renewed impetus to reform labour and land markets, along with further improvements to the business climate, are also crucial", it added.

It also said inflation in India is on the rise, estimated at 3.6 per cent in fiscal year 2017/18 and projected at 4.7 per cent in fiscal year 2018/19, compared with 4.5 per cent in fiscal year 2016/17, amid accelerating demand and rising fuel prices.

The IMF said in India, reform priorities included reviving bank credit and enhancing the efficiency of credit provision by accelerating the clean-up of bank and corporate balance sheets and improving the governance of public sector banks. "This is not true in emerging and developing economies, where financial conditions have tightened markedly over the past six months", he said. In India, a high interest burden and risks from rising yields require continued focus on debt reduction to establish policy credibility and build buffers.

"These efforts should be supported by further reductions in subsidies and enhanced compliance with the Goods and Services Tax", the International Monetary Fund report said.

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