Ailing Pakistan needs bitter IMF medicine: former SBP governor

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KARACHI: Pakistan needs funding from the International Monetary Fund (IMF) in order to get its economy back on track after problems were ignored during a transition to civilian rule this year, former State Bank of Pakistan governor Ishrat Husain has said. “When the economy is ailing, you go to the IMF, and IMF prescribes you some bitter prescriptions which you have to swallow in order to become healthy,” Husain told Reuters. “It’s not that you need an IMF programme as crutches but you need the IMF programme in order to get back on track.” Husain said an IMF agreement was a prerequisite for any debt rescheduling and Pakistan could have avoided going to the IMF for funding had it managed the economy better from the beginning of 2007, particularly in terms of reducing unsustainable subsidies. “We chocked off the entire payment system of the country and then the transition from the previous government to this government was not managed well,” said Husain. The economy was ignored during this transition with drawn-out political wrangling distracting attention, he said. The lesson to be learnt was that the economy could not be used for narrow political purposes, he said, adding that a key factor of an IMF programme would be controlling the fiscal deficit so it did not exceed 4 to 4.5 percent of gross domestic product. reuters



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