Programme off to a good start: IMF – Newspaper

KARACHI: On Thursday, the director of the International Monetary Fund (IMF), Department of the Middle East and Central Asia, Jihad Azour, suggested that the government increase the term of office of the governor of the State Bank of Pakistan from the existing three years.

In a long and detailed interaction with the media, the director said that in order to be in line with international practices, the period of service of the SBP governor should be closer to five years.

He said this while preparing a question about the details of the reforms that the IMF was seeking for the central bank.

Read: the IMF program has started well, it cannot be reviewed after only 3 months: Jihad Azour

Other reform measures included "greater operational autonomy in the law", as well as changes in the priority of the objectives set for the central bank, as well as the end of all State Bank credit to the government.

He said his visit to Pakistan "is not a review as it is scheduled for late October or the first week of November." Instead, the purpose of his visit is only "to meet with the authorities and key stakeholders to get a first-hand impression of what the situation is like," he emphasized.

Recommends five-year tenure for the position of governor of the State Bank

His words put an end to the controversy that his visit was in response to failures in the implementation of the program so far or a government SOS.

"No one in the government requested any change in the objectives" or the deadlines contained in the program, he said in the interaction at a local hotel in Karachi, where Azour is visiting after his discussions in Islamabad.

He was accompanied by the Head of Mission for Pakistan Ernesto Ramírez Rigo and Teresa Daban Sánchez, the representative resident in the country.

"It is too early in the program to expect something, the first review will be the time to see if we are on track with the objectives," he said, although he could say that "the program has performed well." start ", without being more specific with respect to numbers." The first signs show that things are responding faster than in other countries. "

When asked about the risks facing the program, he replied that there are several pillars on which the planned stabilization and reform package rests, and "each of these pillars must move together, not just stabilization."

Secondly, he noted the external shocks, so he said the country needs to "build buffers", referring to fiscal space and foreign exchange reserves.

"The fatigue of the reform could begin to settle," he continued, and said that "people may feel too much pain, but wait and see that the mode will not help the economy."

When asked if he saw the current state of politics in the country as another potential area of ​​risk, he postponed the answer, simply saying "I don't know enough about the complexity of Pakistani politics" and asked Ernesto Ramírez Rigo the question, The head of mission for Pakistan.

"The policy will present a challenge," Rigo said, adding that the program "will require consensus building."

"In some areas, such as regulatory reform or SBP reform, consensus should be easy to reach," he continued, "but other areas will require consensus building." It would not be more specific.

He said it is important to make reforms irreversible, giving circular debt as an example. "It is important not only to address the stock and flow of circular debt at this time, but to ensure that it does not reappear in the future."

He also emphasized "increasing social protection and public capital expenditure" with the resources that the state will accumulate in the future with the successful implementation of the program.

"Commitments have been made from both sides," he said towards the end, referring to the conditions of the program.

"And these commitments must be maintained."

The IMF team meets with the SBP governor

In a separate development, the IMF delegation led by the Director of the Department of the Middle East and Central Asia, Jihad Azour, also met with the governor of SBP, Reza Baqir, to discuss the country's economic situation.

The SBP governor, while sharing his views on the economy with the visiting delegation, said that "Pakistan has embarked on its national economic reform program and said it expected a continued fruitful partnership with the IMF and other stakeholders in the international financial sector. " community to support this reform program. "

He also added that the initial results of the IMF reform program were "encouraging."

Posted on Dawn, September 20, 2019



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