Pakistan is likely to receive $506 million next week or before the end of this month as the executive board of International Monetary Fund (IMF) is due to meet on Friday which is likely to grant final approval for the next tranche under 36-month Extended Fund Facility (EFF).
“After getting this amount, the reserves of country would touch all times high to above $18 billion in the current fiscal year,” a source in the State Bank of Pakistan (SBP) said on Thursday.
Pakistan had already achieved the staff-level agreement with the IMF in May after the successful completion of the 7th review of loan held in Dubai. After this staff-level meeting in Dubai, Pakistan and the IMF officials had said that the country had met all performance criteria or conditions of the IMF and the final approval would be given in the executive board’s meeting of the IMF in June.
The sources in the SBP said the final meeting was going to be held in Washington on June 26 and after its approval, the country would receive $506 million dollar before the end of June this fiscal year.
Pakistan’s economy is continuing to gradually improve helped by macroeconomic stability, lower oil prices and robust remittances, the IMF had told in the press release earlier.
When the government of Prime Minister Nawaz Sharif had took the charge of government after winning election in June 2013, the total reserves of the country stood at around $7 billion and the economic situation was not good.
“The improvement in the economy has boosted investors’ confidence,” an analyst said. The foreign rating company Standard and Poor’s (S&P) has upgraded Pakistan’s credit rating and economic outlook to positive from stable. The S&P has also revised its 2015-2017 average real GDP growth projection for Pakistan to 4.6 percent from 3.8 percent earlier.
In the Budget 2015-16, the federal government has set a GDP growth target of 5.5 percent which was at 4.24 percent in 2014-15. The government is planning to seek to unlock growth primarily through infrastructure and energy investments – broadly resonating with the recently announced federal budget.
As a result of successful economic policies, Pakistan’s economy grew by 4.14 percent in the previous financial year which was the highest during the last six years.
The Japan External Trade Organisation, JETRO, has also declared Pakistan second in terms of business growth, which Goldman Sach’s Jim Neil has forecasted that Pakistan would be 18th largest economy by 2050.
During a recent visit by Chinese President Xi Jinping to Pakistan, both the countries signed above $45 billion worth of investment agreements in Pakistan most of which are with regard to the Pakistan-China Economic Corridor.
Moody’s Investors Services has declared China-Pakistan Economic Corridor as “credit positive” for the country because “it will spur investment activity, boost bilateral trade flows and help ease the country’s growing energy shortages”.
Moody’s upgrades Pakistan’s foreign currency issuer and senior unsecured bond ratings to B3 from Caa1, and assigned a stable outlook. The analysts forecasted the inflation of the country would be around 3.75 percent in the fiscal year 2014-15, while it would be settled around 6 percent in 2015-16.