Addressing Senior Journalists' Forum at the National Press Club on Monday, IMF resident representative in Islamabad Teresa Daban Sanchez counted issues relating to the Financial Action Task Force (FATF), provincial spending behaviours and insufficient parliamentary strength of the government as key risks to its $6 billion 39-month bailout programme.
Sanchez said Pakistan had shared full details of loans with the IMF, adding that CPEC was mostly private sector investment in energy and infrastructure, the report said.
The $60 billion CPEC is a key project of Beijing's Belt and Road initiative.
In reply to a question, the IMF official said that the debt sustainability analysis showed that CPEC loans were manageable.
She said there was a strong need for greater coordination with the provinces in the country to ensure that they spent less and provided budget surplus to the federal government.
Talking about key risks to the IMF programme, Sanchez said the lack of majority of the ruling party in Parliament, fiscal slippages, large amount of rollover need for short-term debts and the global money laundering watchdog's grey list could have implications for capital inflows to Pakistan.
These issues can jeopardize financing assurances under the IMF programme from the World Bank, Asian Development Bank and key bilateral partners, she added.
The first review of the IMF programme would be completed before December this year, the report said.
Regarding the FATF, Sanchez said the IMF had to make sure that countries had legal framework conductive to prevention of money laundering and it had to look at this aspect when a country approached it for support.
"The IMF could continue dealing with countries into grey or blacklist but it will have impact on capital inflows," she said, adding the its board wanted to examine matters relating to money laundering and terror financing because it hampered the taxation system.
Asked if the IMF had also sought a reduction in Pakistan's defence spending, she said it did not get involved in micro-management but "got commitment from authorities to ensure social spending on vulnerable segment of society".
Sanchez said Pakistan followed growth based on consumption and without required level of investment-to-GDP ratio.
"This growth model cannot deliver sustainable growth," she said, adding that the country led to ballooning fiscal and current account deficit while the discount rate on the lower side and overvalued exchange rate resulted in the rising budget deficit and current account deficit.
( With inputs from IANS )