Key Takeaways
- IMF Managing Director Kristalina Georgieva highlighted Pakistan as a successful example of its joint three-pillar approach.
- The approach focuses on sustainable debt, stronger growth, and reforms, particularly through improved domestic resource mobilisation.
- Georgieva noted that this has worked well in countries like Pakistan, alongside efforts by the World Bank.
The International Monetary Fund (IMF) has recognised Pakistan as a model for its successful implementation of a joint three-pillar approach with the World Bank, aimed at promoting sustainable debt, stronger economic growth, and reforms. This recognition was made in a statement issued by IMF Managing Director Kristalina Georgieva at the conclusion of the G20 Finance Ministers and Central Bank Governors meeting in Asheville, North Carolina.
According to Georgieva, the three-pillar approach includes improved domestic resource mobilisation and effective liability management operations, which are designed to attract greater private-sector inflows at lower costs. These measures have been particularly effective in countries such as Pakistan, alongside Ecuador, as noted by the IMF.
Georgieva highlighted that securing strong support from other partners, including bilateral creditors, is essential for the success of this approach. She stressed the importance of building buffers and maintaining policy discipline, especially in light of the challenges posed by the significant increase in yields in advanced economies.
The IMF Managing Director also pointed out that the sovereign debt landscape for emerging and low-income countries has gradually improved in recent years, thanks to domestic policy efforts and international cooperation. However, progress has been uneven, and persistent risks and uncertainties in the global economy, including spillovers from rising yields in advanced economies, continue to pose challenges.
High refinancing needs and rising debt-service costs are particularly constraining for many developing economies, including low-income countries. This situation limits their capacity to finance critical spending on infrastructure, health, and education, which in turn undermines growth and debt sustainability.
Georgieva emphasized the need to help countries create fiscal space for growth-enhancing spending, especially in the current environment. She noted that these challenges are compounded by a sharp decline in net external financing, including cuts in official development assistance and a marked reduction in new inflows from non-Paris Club creditors.
The IMF’s recognition of Pakistan’s economic reforms and debt management strategies underscores the country’s commitment to sustainable growth and reform. This positive assessment could potentially open doors for further international support and collaboration in the future.
The success of Pakistan’s approach is seen as a testament to the effectiveness of the IMF-World Bank three-pillar strategy, which aims to support countries in achieving sustainable debt and strong growth-enhancing reforms.
Accelerating the implementation of the IMF-World Bank Three-Pillar Approach to support countries with sustainable debt and pursuing strong growth-enhancing reforms is a key priority.
Kristalina Georgieva, IMF Managing Director
