Pakistan should trim current account deficit: IMF

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WASHINGTON, Sep 26 (Reuters) Pakistan should be able to maintain high growth this year and next but it ought to reduce the current account deficit by targeting spending, the International Monetary Fund said on Wednesday.

''Further fiscal consolidation, starting in 2007/08, would contribute significantly to reducing the external current deficit while lessening pressures on real interest rates,'' the IMF said in a statement after a mission to Pakistan.

Pakistan's current account deficit mounted to 4.9 percent of GDP (gross domestic product) in 2006/2007, the IMF said, blaming slower export growth. The economy grew 7 percent in 2007/2008 and the IMF expected this pace to be kept up.

Inflation has slowed on a year-on-year basis to 6-1/2 percent in recent months and the IMF said that steps to reduce the role of the State Bank of Pakistan in financing the government and providing export finance would help.

''(The IMF mission) recommended a flexible approach to the determination of interest rates to help achieve the inflation objective and reduce import growth,'' it said.

REUTERS SR ht2028

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