Moving ahead at COVID-19 times: Pakistan has not so far applied for G20 debt relief
Pakistan has not so far demanded debt relief from G20 countries, as neither Islamabad nor any other country has made any formal request to that effect, IMF Resident Leader Teresa Daban Sanchez said on Monday. “The G20 debt relief decision is a little confusing and vague so the IMF is reviewing its content. The countries will have to apply for debt rescheduling, and so far none of the countries, including Pakistan, have applied for it, “said IMF resident chief Teresa Daban Sanchez during an online dialog organized by the Institute for Sustainable Development Policy.
As for the government’s announced construction program, she said it would be temporary, aimed at kick-starting economic development. She said Pakistan had done well during the pre-COVID-19 situation under the IMF project. With regard to the SBP’s autonomy, she said it would be in line with international norms, but she would not back any details
She said inflationary pressures will continue to exist as inflation for the current fiscal year was expected to remain in the double-digit range of 11.3 percent. She said because of the COVID-19 situation Pakistan’s GDP growth rate will turn into declining and negative mode for the current fiscal. Pakistan, she said, will have to use a further 700 billion from its bud
Maria Teresa Daban Sanchez said the performance of Pakistan’s economy had been satisfactory prior to Covid-19 emerging. She said the IMF was quite happy with the way in which Pakistan adopted various policies to achieve fiscal consolidation and macroeconomic stability, and would continue to support the country in the face of the socio-economic challenges posed by COVID 19.
She noted the situation assessment by the IMFs says COVID-19 would reverse the decline in public debt resulting from fiscal consolidation efforts. It will also allow the primary deficit to increase. She appreciated the Government of Pakistan’s decisive response to COVID-19, including cash transfers to most sensitive families, lowering down policy rate, removing import duties on several products, and other initiatives to provide relief for the low-income segments of society.
Commenting on the opening of the construction sector, she said that the IMF is promoting the opening of the workers -intensive sector in which daily wagers can be taken up. She hoped, however, that the announced amnesty for investment in the construction sector would be temporary in nature, and would be withdrawn once the situation becomes normal.