United States impressed by Pakistan’s economic reforms

Wells said that Washington was expanding its Development Finance Corporation (DFC) and Pakistan is going to be a country of great interest once it begins.

After Moody’s recognition of Pakistan’s economic stability, reform efforts by Pakistan have been credited by the United States.

On the back of the country’s reforms supported by the IMF program, Pakistan’s economic outlook was raised from negative to stable by the New York-based international credit rating agency.

Alice Wells, the head of the US State Department’s South and Central Asia Bureau said,

“Pleased to see that Moody’s Inv Svc has revised Pakistan’s credit outlook to stable, thanks to Finance Ministry Pakistan’s reform efforts and IMF program.”

On Wednesday, she tweeted, “With the bold economic reforms, Pakistan can boost growth, attract private capital and expand exports.”

Ms. Wells said that for the enhancement of commercial ties between the two countries, the United States will be bringing 15 trade delegations from Pakistan the forthcoming year. The US commerce department reported that these will be buyer delegations and will attend the US and regional trade shows the oncoming year.

She also praised Pakistan for surging 28 slots on the World Bank’s 2020 Ease of Doing Business ranking and for being one of the top ten reformers globally.

Moody’s said improvements in the balance of payments was a primary driver of the rating action but added that foreign exchange buffers would still take time to rebuild.

Pakistan’s Ministry of Finance welcomed the upgrade.

At a news briefing in Islamabad on Tuesday, Adviser to the Prime Minister on Finance Dr Abdul Hafeez Sheikh said leading financial institutions other than Moody’s report were appreciating Pakistan’s reforms.

Pakistan’s outlook changed from stable to negative due to Moody’s had in June of 2018. This further led to a decrease in the foreign exchange buffers due to an increase in external pressure.
On 27 November, the representatives of the agency visited Islamabad and noted that Pakistan’s economic fundamentals were still open to risks but the country’s institutional strength had increased.

Pakistan was placed among China, India, Jordan, Togo, Bahrain, Tajikistan, Kuwait, Saudi Arabia and Nigeria in the list of the ‘top 10 improvers’ on its Ease of Doing Business Index by the World Bank.
Illango Patchamuthu said, “This rise is significant and made possible by collective and coordinated actions of the federal government and provincial governments of Sindh and Punjab over the past year.”

Wells said that Washington was expanding its Development Finance Corporation (DFC) and Pakistan is going to be a country of great interest once it begins.

Increasing from $29 billion to $60bn, DFC will have more than double the investment cap than the Overseas Private Investment Corporation, the US government agency.

The return of “sustainable growth”:

On July 3, the IMF approved a $ 6 billion bail package to help bring “sustainable growth” back to Pakistan’s economy. It is the 13th IMF bailout for Pakistan that seeks to redress “structural imbalances” in the country’s economy. The program compels Pakistan to increase taxes in order to repay foreign debt and increase foreign exchange reserves.

The program hopes that Pakistan will increase its foreign exchange reserves from $ 6.824 billion to $ 11187 billion next year. This will increase the country’s net reserves in the same period from negative $ 17.7 billion to negative $ 10.8 billion.

Under the program, Pakistan should improve its tax collection target from Rs3.94 trillion ($ 25 billion) to R5.5tr. Over the next two years, the program also calls for additional increases of Rs1.5tr and Rs1.31tr in revenue collection.

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