The International Monetary Fund (IMF) has underscored “the need for urgent” policy reforms in Pakistan in its recent staff report, saying that the country has failed to match the living standards of its peers in the region.
“Pakistan has been falling behind its peers in recent decades in terms of income per capita, competitiveness, and export performance. From 2000 to 2022, Pakistan’s GDP per capita grew at an average annual rate of only 1.9%,” the report read. As per the report, Pakistan’s peers achieved more than twice the aforementioned rate.
“Bangladesh averaged growth of 4.5%, India reached 4.9%, Vietnam 5%, and China a growth of about 7.5%,” the Washington-based lender stated.
The IMF has reviewed the last 10 years of its sponsored programmes in Pakistan and acknowledged that underlying challenges have persisted, recommending enhanced ownership as a key lesson learned.
The IMF evaluated Pakistan’s performance over the past decade. During this period, Pakistan had three upper credit tranche arrangements and one use of the Rapid Financing Instrument under the General Resource Account (GRA).
These programmes were generally initiated against the backdrop of weak external conditions or unprecedented external shocks, such as the COVID-19 pandemic and floods, combined with prolonged fiscal and external vulnerabilities, along with structural challenges. Although early progress was often made due to stronger policies under fund-supported programmes, this progress was not sustained, leading to the re-emergence of imbalances and the need for successor programmes.
