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KARACHI: US Ambassador to Pakistan Donald Blome has said economic policy developed over the next several months would be crucial, remarks that come as a new government prepares to take charge of affairs in Islamabad.

“It will take a concerted effort to ensure it (the economy) moves in the right direction,” Ambassador Blome told a select group of journalists at the US Consulate General in Karachi recently.

“Pakistan has made good progress confronting serious challenges in the past six months. But it remains vulnerable to shocks. Continued progress on key reforms can help Pakistan’s economy become more resilient.”

Pakistan’s economy has been navigating a perilous path, flirting with default fears and raising concerns on its debt profile with many onlookers stressing the desperate need for structural reforms.

A last-minute $3-billion bailout with the International Monetary Fund (IMF) not only helped avert a balance-of-payments crisis, but also took the economy on the path to a reforms’ agenda that saw it raise energy tariffs, and make attempts at privatising loss-making state-owned entities.

Still, average inflation for the first eight months of the ongoing fiscal year stood valiantly at 28%, and overall Large Scale Manufacturing (LSM) sector has shown negative growth of 0.39% during the first half (July-December) of 2023-24.

With the IMF bailout scheduled to end soon, analysts believe another programme is certain – a longer, tougher and bigger facility that takes Pakistan closer to a level of self-reliance.

Blome was sworn in as the US Ambassador to Pakistan on April 11, 2022, merely a day after Pakistan saw yet another change at the Prime Minister’s Office. Barely two years into his post, he will see the return of Shehbaz Sharif as Pakistan’s 24th PM.

IMF: PM asks his team to begin a course of action

Ambassador Blome said the path for the new government is clear.

“One of the first things, in all likelihood, the new government will have to address will be finding a way ahead with a new IMF programme. We certainly encourage it to work with the IMF on reforms that make sense for Pakistan, and help it break the cycle of indebtedness and required international financing that constrains other kinds of things for any country that’s involved with it,” he added.

When asked if the new setup – formed after unlikely partnerships were forged – could undertake reforms, Ambassador Blome said the incoming government has the ability to do it.

“We want Pakistan to succeed.

“If this is done (economic reforms), it will build certainty and confidence among investors, and enable economic growth, fueled by sustainable, inclusive FDI from the US and other partners. We are confident Pakistan can do this, and break free from an over-reliance on unsustainable debt.”

Like a lot of international investors, US firms are wary of volatility or inconsistency in policy. But it hasn’t meant that there has been a large exodus of existing investors. I’ve seen that in a lot of cases, plans for further investment have been deferred, rather than cancelled: US Ambassador to Pakistan Donald Blome

Business ties with the US – long seen as a major ally and important trading partner – have struggled to make the headlines in the face of political instability in Pakistan, but Blome said Washington wants to see more US investment flow into the country.

“The US sees huge potential in increasing two-way trade and investment between the two countries.

“Like a lot of international investors, US firms are wary of volatility or inconsistency in policy – wherever they are looking – this is one of the factors in Pakistan that is a concern.

“But it hasn’t meant that there has been a large exodus of existing investors. I’ve seen that in a lot of cases, plans for further investment have been deferred, rather than cancelled. There is some watchfulness of government policy, but with strong signals that Pakistan is moving forward on the reform agenda, a lot of these concerns will be assuaged. I expect that international investors will see that positively.”

Ambassador Blome also said this is a dynamic moment in global investment and trading patterns, and Pakistan has the potential to take advantage.

“During these last two years, a pattern of strong capital shifts and investment flows has been seen, moving from place to place in response to supply-chain disruptions.

“It has been a dynamic period. Some Asian economies have done really well in this time. Pakistan has lagged a little bit in attracting that, but I strongly believe Pakistan should be in that conversation. It has enormous potential to take advantage of a dynamic moment in global investment and trading patterns. This is one of the things any government should be looking at prioritising.”

Ambassador Blome said Pakistan will be competing with dozens of other locations, and needs an “aggressive approach to attracting FDI like others have”.

Copyright Business Recorder, 2024

Bilal Memon

Bilal Memon is the Head of Digital Content at Business Recorder. His Twitter handle is @bilalahmadmemon

Comments

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Arif Mar 05, 2024 09:00am
Viceroy have spoken
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KU Mar 05, 2024 02:06pm
Smooth talk on our ''Internal Matter'', but the very leadership in parliament is responsible for Pakistan's past predicaments and bankruptcy. What say the ambassador on his support to NRO graduates?
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Az_Iz Mar 05, 2024 05:57pm
The IMF should keep the pressure on the new govt. Else these idiots will take the money,and continue with the easy and useless cycle of import,subsidize and consume.
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Az_Iz Mar 05, 2024 06:02pm
Due to pressure from IMF and Miftah's advise, the govt ended selling petroleum at half the price and imposed petroleum levy, which is generating almost $4 billion in revenues.Cannot afford subsidies.
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Az_Iz Mar 05, 2024 06:08pm
The politicians are gutless to take reforms on their own.They just want IMF to write checks. IMF should hold their feet to the fire,like,on Petroleum levy,which is generating billions in revenue.
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Az_Iz Mar 05, 2024 06:15pm
Borrow and consume will not take the country anywhere. Need sensible and bold reform, with pressure from IMF. The gutless politicians will not do it on their own.
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Az_Iz Mar 05, 2024 06:39pm
Like it or not,what is said here is pretty much what needs to be done,so the country can stand on it's own feet and progress.The cycle of borrow and consume, and subsidies, will lead you nowhere
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Az_Iz Mar 05, 2024 06:43pm
Pay your own bills,like in the past few months, you have a chance to make progress. Just borrow and consume,you will keep sinking into more debt,like in the past few years.
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Yaqootmir Mar 05, 2024 08:38pm
Chances of US helping Pakistan with the economy is ZERO. The sooner the new government tightens ranks with China, the better, the US is simply a kniving country which cannot be trusted with ANYTHING.
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