$6.7b bailout: IMF asks Pakistan to remain firm on deal

Release of tranches linked with meeting performance criteria.


Shahbaz Rana September 15, 2013
$6.7b bailout: IMF asks Pakistan to remain firm on deal. PHOTO: FILE

ISLAMABAD:


The International Monetary Fund (IMF) asked Pakistan on Saturday to implement meaningful structural and governance reforms and remain firm on the commitments it made under the $6.7 billion programme in order to address the country’s chronic economic problems.


“To achieve sustained and inclusive growth, short-term macroeconomic measures must be complemented by significant structural and governance reforms,” said Masood Ahmed, Director of the Middle East and Central Asia Department of the IMF after conclusion of his week-long visit to Islamabad.

Ahmed and the IMF’s Executive Director Jaffar Mojarrad visited Islamabad to convey the message of the IMF Executive Board. They told the Pakistani leadership to take the programme seriously this time and refrain from running away from the commitments made with the IMF before seeking the $6.7 billion loan.

The programme carries half a dozen performance criteria to control the ever-widening budget deficit. It also has about eight structural benchmarks aimed at addressing the problems in the areas of taxation, energy, trade and financial sector. The IMF has linked quarterly tranches of $509 million with the implementation of the set of conditions agreed for each quarter of the next three years.



Ahmed said IMF remained fully committed to support Pakistan implement economic reforms through financing, policy advice and technical assistance for the recently approved Extended Fund Facility arrangement. But, “firm implementation of the reform measures agreed in the arrangement will be crucial to overcome the economic imbalances, build investor confidence, and move the country on a higher growth path,” he told the Pakistani authorities.

The IMF delegation met with Prime Minister Nawaz Sharif, Finance Minister Ishaq Dar, Governor of State Bank of Pakistan Yaseen Anwar, members of Pakistan’s economic team, leaders of political parties, chief ministerss and members of the Parliament.

A statement issued by the IMF on conclusion of the visit stated that the implementation of the recently announced national energy policy will address the long-standing problems in the sector, which constitute the most crucial constraint on growth and have generated large fiscal costs.

In addition, the trade regime needs to be liberalised, public sector enterprises need to be restructured or privatised and the business climate needs to be improved.

Ahmed said the visit was an opportunity to stress the commitment of the IMF to support Pakistan’s economic reform programme, and highlight the importance the Fund attaches to promoting strong, sustainable, and inclusive growth that could alleviate poverty and improve the living standard for millions of Pakistanis.

He said that Pakistan was facing serious economic challenges. “Overall vulnerabilities and crisis risks are high, with subpar growth and unsustainable fiscal and balance of payments positions,” said Ahmed.

Published in The Express Tribune, September 15th, 2013.

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