DUBAI, Sept 18: South Asian countries must step up reforms as current levels of growth are not good enough to tackle looming poverty and high public deficits, the International Monetary Fund (IMF) warned on Thursday.

The IMF’s World Economic Outlook report advised India, Bangladesh and Pakistan to speed up banking reforms, concentrate on privatizing state-owned companies and stop doling out subsidies in order to free up money for social sector spending.

It said it would be impossible for India to hit its target of eight per cent annual economic growth without bringing down its fiscal deficit.

“In India, while growth is expected to pick up on the back of a recovery in the agricultural sector... the expansion remains well below the eight per cent rate targeted by (the) government, undermining official goals for reducing poverty,” said the report.

“A key issue remains the slow pace of fiscal and structural reforms.”

India’s central bank has said the country’s gross domestic product (GDP) growth in the financial year to March 2004 would be significantly more than its earlier projection of six per cent but well below the targeted eight per cent.

A withering drought last year shaved one percentage point off India’s annual economic growth rate in the year to March 2003, bringing it down to 4.3 per cent.

But this year’s monsoon has surpassed expectations, with large parts of India receiving 15 per cent more rain than normal, fuelling hopes of a bumper harvest.

The IMF said it was happy that growth was rising again in Pakistan, which achieved 5.5 per cent economic growth in 2002-2003, but criticised Islamabad for being sluggish in meeting reform targets.

“While growth has picked up in Pakistan, bold measures are needed to reduce public debt — including by improving tax compliance and reducing subsidies to public enterprises and consumers, while creating room for human development expenditure,” said the report.

The IMF said “economic recovery was under way in Bangladesh thanks in part to a strengthening of macroeconomic policies.”

However, it urged Bangladesh to speed up structural reforms including privatizing more public sector enterprises to boost the country’s fragile economy and offset bad loans.—AFP