The International Monetary Fund has expressed satisfaction with Pakistan’s continuing improved economic performance saying the country will get $1.1 billion upon executive board’s approval of the review in December.
The Fund’s statement came after an International Monetary Fund (IMF) staff mission, led by Jeffrey Franks, held discussions with top Pakistani officials including Finance Minister Ishaq Dar and State Bank of Pakistan (SBP) Governor Ashraf Wathra in Dubai during October 29-November 8 meetings for the fourth and fifth reviews of Pakistan’s $6.6 billion Extended Fund Facility (EFF) program.
“The IMF mission held productive discussions with government and central bank officials on Pakistan’s economic performance under the EFF programme and is encouraged by the overall progress in strengthening macroeconomic stability and output growth,” Franks said in a statement released on Saturday.
“The mission reached staff-level understandings with the authorities on a memorandum of economic and financial policies which, upon management’s approval, will be considered by the IMF executive board in December to conclude the fourth and fifth reviews. Upon the Board’s approval, SDR 720 million (about US$1.1 billion) will be made available to Pakistan.”
The Fund noted that Pakistan’s “economic indicators are improving with growth expected to reach 4.3 per cent in fiscal year (FY) 2014/2015, inflation on a downward trajectory, and credit to the private sector expanding at a robust pace”.
The statement said the external current account deficit was somewhat higher than expected over the past two quarters with lower goods exports and higher imports partially compensated by strong remittances performance.
“The rapid build-up of gross reserves which rose from US$5.4 billion at the end of March to US$9.1 billion by the end of June 2014 stalled thereafter due to delays in divestment and sukuk transactions and the effects of political uncertainty on capital flows. However, going forward reserves are expected to surpass 3-months of imports by the end of FY 2014/2015.
“Despite some difficulties, the authorities’ reform programme remains broadly on track with the government and SBP meeting most quantitative performance criteria for end of June and end of September 2014.1 The authorities are committed to taking the necessary corrective actions for missed targets, and with these actions, they will be on-track to meet their objectives for end-December.
“The mission was pleased that the government met the indicative targets on social transfers to the poor under the Benazir Income Support Program (BISP). The staff welcomed the government’s efforts to expand support to the poor through the BISP to 4.8 million eligible families by the end of this year.
“The mission was encouraged by the strong fiscal performance achieved during FY 2013/2014, and by the authorities’ determination to further lower the deficit to 4.8 per cent of GDP in the current fiscal year.”
The statement said that progress was being made in broadening the tax base by eliminating tax concessions and exemptions granted through Statutory Regulatory Orders (SROs), strengthening anti-money laundering legislation, and implementing tax administration reforms to enhance compliance and enforcement.
“However, the continued efforts are needed to improve the tax-to-GDP ratio and create resources to finance much-needed spending on investment and social development while making the taxation system more efficient, transparent and equitable.
“The SBP remains committed to a prudent monetary policy stance to assure attainment of its inflation and reserves accumulation objectives.”
