After a surprising election result, in which PTI-backed candidates won a majority, a fragile coalition government was formed. We expect appetite for reforms to be weak, which may hinder or prolong negotiations for a new IMF program. The biggest hindrance will come from fiscal consolidation.

On January 11, the IMF approved the first review of the 9-month SBA program, releasing US$ 700mn in much needed financing assistance. While financing needs for the remainder of the fiscal year should be covered, a successor IMF program will be needed after the SBA ends in March 2024.

The IMF recently agreed to a 9-month, US$ 3bn, program, providing Pakistan with a temporary financial lifeline. However, much needed fiscal measures and structural reforms will be put on hold in an election year. Increasing the risk that future tranches of the program may not be disbursed.

Pakistan is on the verge of a balance of payments crisis. However, we believe an agreement with the IMF will be reached in the next few days, releasing much needed financing. Further official aid will be needed in FY23, while a renewed IMF program and debt reprofiling is expected by the end of 2023.

Debt default risk has gone up substantially, as the financing gap has increased.

The widening of the current account deficit has led to a decline in official reserves to critical levels. Reviving the IMF program is necessary to ensure that Pakistan can meet its financing obligations.

The result of higher oil prices is a shift in purchasing power from oil consumers to producers. Oil exporters are getting a boost to their terms of trade, leading to wider CA and fiscal surpluses. Higher energy prices will hurt several EMDEs that remain heavily dependent on petroleum imports.

We expect real GDP growth to remain around 4% in FY2021/22. Monetary policy remains accommodative. Adequate net capital inflows will offset the widening CA deficit, increasing FX reserves. We expect further fiscal consolidation supported by ongoing reforms under the IMF EFF arrangement.

Sovereigns are increasingly tapping capital markets to finance fiscal deficits. Private inflows to the MENA region continue to be dominated by Saudi Arabia, the UAE and Qatar. Resident outflows are declining but still exceed inflows. FDI remains subdued and concentrated in the energy sector.

We expect Pakistan to return experience modest growth in FY2020/21 following a small contraction in FY2019/20. However, risks to the economic outlook are tilted to the downside. Recurrent outbreaks of COVID-19, a large fiscal deficit, and high public indebtedness remain major challenges.

Our MENA growth forecast stands at -0.3% with additional downside risks and high uncertainty over the duration of the shutdown and an additional potential fall on oil prices. We project recession in most oil exporters, the lowest growth in oil importers since the early 1990s, and wide twin deficits.

Five months into the IMF’s $6 billion EFF program, Pakistan’s progress looks better than anticipated. • We expect official reserves to continue recovering as the current account narrows and capital inflows improve. However, gross external financing needs at around 9% of GDP warrant caution.

Non-resident capital inflows to the MENA region are projected to rise from $165bn last year to $200bn in 2019 before moderating to $173bn in 2020. With the increasing inflows, inclusion into global indices, and ongoing reforms, the MENA region is becoming more prominent on the EM investment map.

We expect growth in the MENA region to slow to 1.4% in 2019 from 1.8% in 2018, dragged down by the deep recession in Iran and the compliance with the OPEC + deal. This aggregate picture, however, hides considerable heterogeneity in economic paths across the region.

We still expect Brent oil prices to average $65/b in 2019 and $62/b in 2020. Growth in non-OPEC supply combined with deceleration in global oil demand growth in 2019 and 2020, is offsetting upward pressure on oil prices from rising geopolitical tensions that could disrupt supply.

Loose monetary and fiscal policies have led to the build-up of macroeconomic imbalances. The IMF deal of $6bn will be adequate only with additional foreign inflows and significant rollovers. Decisive policy action and substantial external financing will be needed to achieve macroeconomic stability.

Loose monetary and fiscal policies have led to the build-up of macroeconomic imbalances. Decisive policy action and substantial external financing wil.

Widening fiscal and current account deficits have led to a substantial decline in international reserves. The State Bank of Pakistan has devalued the.

The Pakistani economy experienced robust growth in the past two years driven largely by consumption and some progress in structural reforms. We expect.

Frontier Asia has enjoyed stronger growth than most emerging markets over the past decade. While GDP per capita is still low, the gap with mainstream.