International Monetary Fund head Christine Lagarde on Monday urged Pakistan to seize a “moment of opportunity” to continue reforms and reduce public debt after successfully completing a three-year programme with the global fund.
Pakistan last month received the last payment of a $6.7 billion bailout package that helped it stave off default in 2013. It marks the first time Pakistan has completed an IMF programme after abandoning 11 others in the past.
Lagarde, in her first visit to Pakistan, praised the progress Pakistan has made in three years, from reducing costly subsidies, privatising some loss-making state firms and sharply increasing foreign reserves.
She added that reforms must go further in order to generate enough jobs for the roughly 2 million Pakistanis who enter the workforce each year. Roughly one-third of Pakistanis live under the official poverty line, she said.
“Pakistan has reached what I call that moment of opportunity where it can embark on the next generation of reforms to generate higher and more inclusive growth and tap into the dynamism of emerging economies.”
Lagarde specified that the government must bring down public debt – which now stands at 65 percent of GDP – spur exports and further expand tax collection, which is still about half of what Lagarde said was a “feasible amount”.
The IMF has forecast growth of 5 percent for Pakistan for the year ending in June 2017, which would be the biggest economic expansion in nine years.
Still, economists forecast the country must grow at least 6 percent just to keep pace with the rapidly expanding workforce in the country of 190 million people.