Washington: The International Monetary
Fund urged Pakistan to take further steps to curb inflation
and buffer the economic shocks of higher oil prices.
After a mission to Pakistan that ended yesterday the
IMF reported "constructive" talks with government and central
bank officials on measures to restore economic stability and
structural reforms to bolster public finances and the
"Significant fiscal consolidation will be needed in
(fiscal) 2011-2012 in order to reduce inflation and ensure
debt sustainability. The lower budget deficit would also help
manage the impact of higher oil prices on the economy," Adnan
Mazarei, head of the mission, said in a statement.
Pakistan`s fiscal year begins on July 1.
The IMF in November 2008 approved a rescue package for
Pakistan as the country struggled to cope with bloody attacks
by Islamic radicals, 30-year-high inflation and fast-depleting
The original 23-month loan of about USD 7.61 billion
was extended to December 30, 2010 and its value increased.
In December the IMF executive board approved a
nine-month extension of Pakistan`s loan package through
September 30, 2011.
Mazarei said that Pakistan`s budget deficit and
"quasi-fiscal operations" had fuelled looser monetary
conditions, adding to inflationary pressures.
To help to counter those pressures, the IMF official
said that the government should further reduce borrowing from
the central bank.