IMF warns of cautious approach to structural reforms

September 10, 2021

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The International Monetary Fund’s (IMF) Independent Evaluation Office (IEO) noted that Regional case studies highlight the need for more cautious assumptions about the feasibility of Pakistan’s structural reforms and the drivers of growth.

The Independent Evaluation Office has published its Growth and Adaptation of IMF-Supported Programs, which assesses the extent to which IMF-supported programs have helped support economic growth by making changes to external resilience.

It focuses on the IMF’s financing mechanisms for 2008–2019, both under the General Resources Account (GRA) and under the Poverty Reduction and Growth Fund (PRGT).

While the assessment does not assess the experience of the COVID-19 pandemic, its lessons are increasingly important as many countries now face strong growth constraints as they seek IMF support for a sustainable recovery.

The report found that in Jordan, Pakistan and Tunisia, IMF staff underestimated the complexity of the political transition and the consequences of the associated political shocks, security shocks and regional shocks.

At the same time, government officials wanted to express their hope for continued political support for the difficult reforms. The result was a mismatch between optimistic growth forecasts and actual results.

In Jordan, Pakistan and Tunisia, case studies highlight the need for more cautious assumptions about the feasibility of restructuring and the drivers of growth.