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Pakistan: IMF report commends Pakistan''s economic performance |
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2004-7-26
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The International Monetary Fund in its annual 2004 Country Report on Pakistan commended the economic performance of Pakistan according to the report released by the IMF.
Financing its current Poverty Reduction and Growth Facility (PRGF) arrangement, it states: "Pakistan''s macroeconomic situation has improved considerably." "Economic growth has rebounded, inflation has remained low, debt indicators have improved considerably, and foreign exchange reserves have increased sharply."
The Country Report is based on Eighth Review under the Three-Year Arrangement under the Poverty Reduction and Growth Facility and request for Waivers and Modification of Performance Criteria-Staff Report.
"Structural reforms are advancing, albeit only slowly in the energy sector," it says,
The overall fiscal deficit (excluding grants) will be contained to 4 percent of GDP, helping to reduce the public debt ratio to below 80 percent of GDP. CBR revenue is projected to increase by 0.2 percent of GDP in 2004/05, reflecting further improvements in administrative efficiency and broadening of the tax base.
With regards to SAFTA and trade with India, the report states that while India has granted Most Favored Nation (MFN) status to Pakistan, Pakistan''s imports from India remain governed by a restrictive positive list. With the advent of SAFTA, Pakistan will need to open itself to imports from India by January 2006. Pakistan''s Ministry of Commerce estimates the potential of liberalizing trade flows to be about $700 million per annum for exports from Pakistan to India and $2 billion in the reverse direction. Expiration of textile and apparel quota system under the WTO Agreement on Textiles and Clothing, the quota system that was previously put in place under the Multifiber Agreement, is to expire by end-2004. This is likely to lead to shifts in trade patterns.
For Pakistan, with a share of textiles and clothing in total merchandise exports of approximately 70 percent, the stakes are high as per the report. Studies undertaken by the U.S. International Trade Commission and by the World Bank predict that China will become a dominant producer, while Pakistan could emerge as a major supplier for a narrower range of goods. At the moment, the effect on Pakistani exports is difficult to quantify, as several key factors are not yet known informs the report.
The report informs that an important factor will be the way importing countries make use of the textile-specific safeguard provisions contained in China’s WTO accession protocol. |
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