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IMF Executive Board approves immediate disbursement of $504.8m to Pakistan

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WASHINGTON: After successfully completing the eights review of Pakistan’s economic performance, the Executive Board of International Monetary Fund (IMF) has decided to provide immediate disbursement of $504.8 million.

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After completing the review under a three year programme supported by an Extended Fund Facility (EFF) arrangement, the Executive Board also approved the authorities’ request for waivers of non-observance of the end-June 2015 performance criteria on the ceiling on overall budget deficit and the ceiling on net government budget borrowing from the State Bank of Pakistan (SBP) as well as modification to adjust the end-September 2015 performance criterion on net domestic assets of the SBP target.

Commenting on the current economic performance of the Pakistan, Deputy Managing Director and Acting Chair, Mitsuhiro Furusawa said:

Economic activity is picking up pace and vulnerabilities are gradually receding. Continued prudent policies and reform efforts are necessary to lock in the gains so far in macroeconomic stability and reinforce the foundation for sustained high growth.

“The authorities’ commitment to strengthening Pakistan’s fiscal position is welcome. Further steps to increase revenue mobilization, including by broadening the tax base and strengthening tax administration, remain key to generating resources for priority spending and greater social protection. Strengthening coordination with the provinces will also help safeguard fiscal discipline”, said Mr. Furusawa.

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“Foreign exchange reserves have continued to increase, benefiting from windfalls from lower import prices. Additional efforts are needed to further strengthen external buffers. The central bank’s new interest rate corridor represents a major step to improve the monetary policy framework which would further benefit from greater central bank autonomy. In this regard, an early adoption of pending legislation would bolster governance and the credibility of monetary policy. Beyond this, further progress is also needed to address the remaining recommendations of the 2013 Safeguards Assessment report.

“Progress with bank capitalization and efforts to facilitate foreclosures and corporate restructuring are bolstering financial stability. Further strengthening Pakistan’s regime against money laundering and the financing of terrorism remains an important policy priority for the authorities.

“The momentum of structural reform must be maintained to achieve high and durable growth over the medium term. In particular, reforms should aim at securing a reliable supply of electricity and gas, and reducing fiscal risks posed by these sectors. An accelerated pace of privatization and restructuring of public enterprises as well as regulatory reform will also go a long way toward improving the business climate and supporting private sector-led activity.”

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