Islamabad (The Hawk): The International Monetary Fund (IMF) programme is now the only and most realistic alternative for Pakistan's rapidly deteriorating economy, and it represents the country's best chance of surviving and avoiding a financial default.
The two most difficult and important issues for the current administration of Pakistan are still the country's declining foreign exchange reserves and inflation, both of which are predicted to get worse during the final six months of the current fiscal year.
The fact that the subject was one of the most crucial components of the first round of the National Security Committee (NSC) meeting on Friday, in which the top civilian and military brass were briefed about the worsening challenges the country faces on the economic front, demonstrates the sensitivity and critical nature of Pakistan's current economic challenges.
A monthly economic forecast report was created by the Ministry of Finance and presented by Finance Minister Ishaq Dar just prior to the start of the NSC meeting.
According to the report's specifics, the Ministry has underlined that policymakers will continue to face significant problems from inflation and limited foreign exchange reserves.
However, it has also consistently argued that the external deficits were declining and will eventually get under control sufficiently to be financed.
The monthly economic outlook report of the Ministry of Finance stated that "combination of poor economic growth, high inflation, and low levels of official reserves are particularly hard for policy makers."
The report also highlighted that there was a shocking $8 billion external financing deficit versus the requirements for the remaining six months of the current fiscal year, which came a day after the central bank disclosed that Pakistan's foreign exchange reserves had dropped below $6 billion.
The growth rate is expected to be barely 2%, while inflation will likely continue to be high at around 23%.
Due to the low credit ratings and high default risk, which directly affect the inflow and realisation of money from various lender countries, the difference between inflation and growth rate is growing.
The IMF programme under its Extended Fund Facility (EFF) remained Pakistan's only option for adhering to the strict requirements put forth as a precondition for release and approval of the ninth review and the next tranche, regardless of how painful and difficult a revival of the programme may be for Pakistan in terms of inflation. This information was also provided during the closed-door NSC meeting.
It was also made clear that if Pakistan refused to abide by the IMF's demands and left the programme, not only would the country's economic recovery take longer, it would also be at risk, which would make the agony even worse.
(Inputs from Agencies)