IMF sees weak external position

Pakistan’s external position could deteriorate as imports increase and remittance growth eases, the International Monetary Fund said in a regional report published Thursday, according to The Express Tribune. The lender urged a flexible exchange rate to protect reserves and said tighter monetary policy may be needed to contain inflation.

The IMF estimates the current account shortfall at 1% of GDP, or about $4.5 billion, and puts gross financing needs at 22% to 25% of GDP. It also forecasts inflation of 9.9%, up 1.5 percentage points from its earlier projection, while leaving economic growth at 3.5%.

The report precedes the Monetary Policy Committee meeting, where the policy rate currently stands at 11.5%. It also highlights banks’ 63% exposure to government debt and warns that elevated public borrowing needs can add to fiscal sustainability risks.