ISLAMABAD: The government of Shehbaz Sharif is facing the daunting task of managing a stuttering economy with huge deficits, an aide to the new prime minister said on Tuesday.
Sharif was elected as prime minister on Monday followed a week-long constitutional crisis after National Assembly ousted Imran Khan in a contentious no-confidence vote.
“Imran Khan has left a critical mess,” Miftah Ismail, who is likely to be Sharif’s finance minister, told a news conference in Islamabad, adding the suspended talks with the International Monetary Fund (IMF) would be resumed as a priority.
“We will restart talks with the IMF,” he said.
Ismail repeated Sharif’s concerns raised in his maiden speech in parliament at what he described as record deficits his government will inherit from Khan, who was accused by the opposition of mismanaging the economy.
Sharif set up a National Economic Advisory Council in his first meeting on Tuesday.
The IMF has suspended talks ahead of the seventh review of a $6 billion rescue programme agreed on in July 2019.
The current account deficit is projected at around 4 percent of GDP for the 2022 fiscal year (FY), the central bank said last week, while foreign reserves dropped to $11.3 billion as of April 1, compared with $16.2 billion less than a month earlier.
The central bank last week hiked key interest rates by 250 basis points to 12.25 percent in an emergency decision, the biggest hike in decades, citing deterioration in the outlook for inflation and an increase in risks to external stability, heightened by the Russia-Ukraine conflict, as well as local political uncertainty.
The bank also revised average inflation forecasts upwards to slightly above 11 percent in FY22, which ends in June.
