The International Monetary Fund (IMF) has urged Pakistan to bring its current account deficit under control, an official said, as Prime Minister Shebaz Sharif's government seeks an increase in the size and duration of the current IMF programme.

Pakistan's current account deficit ballooned to $13.2 billion in the nine months of the current fiscal year from a gap of $275 million a year earlier on the back of soaring oil import costs, official data showed.

Rating agency Moody's expects the deficit to widen to five to six per cent of gross domestic product in the current fiscal year ending June 30, up from its earlier 4pc projection, putting greater pressure on Pakistan's foreign reserves.

Jihad Azour, director of IMF's Middle East and Central Asia Department, told Reuters that the fund's team will assess the policy priorities of the new government and the economic impact in the context of the war in Ukraine.

“But of course, we have been over the last few months highlighting the importance of maintaining the current account situation under control [and] reduce the current account deficit.”

He did not elaborate on the policy actions, but the IMF has earlier said that a continued commitment to a market-determined exchange rate and a prudent macroeconomic policy mix would help reduce the deficit.

The new government faces enormous economic challenges, predicting the fiscal deficit will exceed 10pc of GDP at the end of the current financial year.

Finance Minister Miftah Ismail said on Monday that Pakistan sought an increase in the size and duration of its $6bn IMF programme.

When asked whether Pakistan would need to take certain steps first, such as cutting oil and gas subsidies, Azour said these will be discussed during the visit in May. “We'll discuss these issues and therefore I will not preempt those discussions,” he said.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

On writing

On writing

There is no ceremony or ritual that marks any person as a writer except the simple yet unimaginably significant act of starting to write.

Editorial

A way forward
Updated 17 Jul, 2024

A way forward

Before political leaders inflict more damage, they must give talks a chance.
Export delusions
17 Jul, 2024

Export delusions

THE trade ministry’s ‘plan’ to almost double exports to $60bn over the next three years is nothing more than...
Diversity in UK politics
17 Jul, 2024

Diversity in UK politics

THE recent UK elections have ushered in the most diverse parliament in the nation’s history. Under the leadership...
Banning PTI
Updated 16 Jul, 2024

Banning PTI

It appears that the govt and its backers within the establishment have still not realised that they are in uncharted territory.
Nato at 75
16 Jul, 2024

Nato at 75

EMERGING from the ashes of World War II, and locked in confrontation with the Soviet-led Communist bloc for over ...
Non-stop massacres
16 Jul, 2024

Non-stop massacres

Netanyahu is cunningly pretending to talk peace while mercilessly pounding Gaza. What is clear is that a return to pre-Oct 7 status quo is impossible.