Lender agrees to release the remaining sum of $510 million. PHOTO: NNI
An IMF staff mission led by Harald Finger, the chief of the lender’s mission in Pakistan, visited Dubai from May 2 to May 11 to conduct discussions on the 11th review. The staff team met with Finance Minister Ishaq Dar, State Bank of Pakistan (SBP) Governor Ashraf Wathra, and other senior officials.
After reviewing the country’s economic performance over the last quarter, the lender agreed to release the remaining sum of $510 million.
“After productive discussions, the mission and the Pakistani authorities have reached staff- level agreement on the completion of the eleventh review under the Extended Fund Facility arrangement. The agreement is subject to approval by the IMF Management and the Executive Board. Upon completion of this review, SDR 360 million (about $510 million) will be made available to Pakistan,” IMF said in a statement issued at the conclusion of the mission.
The lender appreciated the pace Pakistan’s economy is growing at and projected that the country’s GDP growth will reach 4.7% in the next fiscal year.
“Growth remains robust despite a weak cotton harvest and declining exports amid a more challenging global environment. Real GDP growth is expected to reach 4.5% in FY 2015/16 and 4.7% in FY 2016/17, helped by favorable oil prices, rising investment, improvements in energy supply, buoyant construction activity, and acceleration of credit growth,” the statement said.
“Headline consumer price inflation has continued to rise, owing to diminishing effects of past declines in commodity prices. Average inflation is expected at around 3%in FY 2015/16, remaining well-anchored by continued prudent monetary policy. Gross international reserves reached $16.1 billion in March 2016, covering close to four months of prospective imports,” it added.
IMF welcomed Pakistani authorities’ “strong programme performance in the third quarter of FY2015/16.”
“All end-March 2016 quantitative performance criteria, including the budget deficit target and the floor on the SBP’s net international reserves, have been met. The indicative targets on social spending under the Benazir Income Support Program (BISP) and power sector arrears have also been met. Tax revenue collection continued to grow at a healthy pace in the third quarter of FY2015/16, and the indicative target of PRs 2105 billion was missed by only PRs 3 billion. Most structural benchmarks have also been met.”
It added that “the authorities’ reform efforts continue to strengthen macroeconomic stability, public finances, foreign exchange reserve buffers, and expanded protection of the most vulnerable under BISP.”
“Further consolidation of these gains and strengthening the long-tem resilience of the economy is the main priority in the period ahead. To this end, we welcome the authorities’ plans to continue with fiscal consolidation in the coming fiscal year, further expand the tax net, strengthen the fiscal responsibility framework, address financial losses in the public enterprises, continue to pursue energy sector reforms, and accelerate competitiveness-enhancing improvements in the business climate. Completing these reforms will help consolidate macroeconomic stability and create conditions for higher growth and job creation.”
Discussions on the twelfth and last review under the program are tentatively planned for August.
Published in The Express Tribune, May 13th, 2016.
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