WASHINGTON: The International Monetary Fund said on Friday that Pakistan has agreed to cut its budget deficit for this year.

In a statement issued in Washington, the IMF said “there was agreement on the need to reduce the budget deficit in the current financial year.”

“Looking ahead, significant fiscal consolidation will be needed in 2011/12 in order to reduce inflation and ensure debt sustainability,” it added.

The IMF also welcomed the recent efforts by the government to cuts its borrowing from the central bank.