WASHINGTON: The International Monetary Fund acknowledged strong performance of the government in the second quarter of the fiscal year 2015-16, after the conclusion of successful review under a three-year Extended Fund Facility which will pave the way for the release of about $500 million to Pakistan.
An IMF mission led by Harald Finger, visited Dubai during January 26-February 4, 2016 to conduct discussions with Pakistani officials on the tenth review of Pakistan's economic program supported by the EFF arrangement. Finance Minister Ishaq Dar, State Bank of Pakistan (SBP) Governor Ashraf Wathra, and other senior officials attended the meeting.
"After constructive discussions, the mission and the Pakistani authorities have reached staff-level agreement on the completion of the tenth review under the EFF arrangement," Finger said in a statement issued in Washington.
The agreement is subject to approval by the IMF Management and the Executive Board. Upon completion of this review, SDR 360 million (about US$500 million) will be made available to Pakistan, the statement added.
"The mission welcomed the authorities' strong program performance in the second quarter of FY2015/16. All end-December 2015 quantitative performance criteria, including the budget deficit target and the floor on the SBP's net international reserves, have been met," the IMF official said.
The indicative targets on social spending under the Benazir Income Support Program (BISP) and power sector arrears have also been met. Strong tax revenue collection in the second quarter of FY2015/16 helped recoup much of the previous quarter's shortfall, with the indicative target missed only by a nominal margin.
"The authorities' program continues to firm up macroeconomic stability with stronger public finances and foreign exchange reserve buffers, and expanded protection of the most vulnerable under the Benazir Income Support Program (BISP)," said the statement.
Further consolidation of these gains and strengthening the long-tem resilience of the economy is the main priority in the period ahead, the IMF official said and added that advancing the energy sector reform, setting in motion competitiveness-enhancing improvements in the business climate, continuing to expand the tax net, and ending losses in public enterprises will be critical.
"Completing these reforms will help set Pakistan on a permanently higher growth trajectory and achieve the country's broader economic objectives."
The IMF noted that economic activity remains robust, although a weak cotton harvest, declining exports, and a more challenging external environment are weighing on growth prospects.
Real GDP growth is expected to reach 4.5 percent in FY 2015/16, helped by lower oil prices, planned improvements in the energy supply, investment related to the China Pakistan Economic Corridor (CPEC), buoyant construction activity, and acceleration of credit growth.
The mission thanks the authorities and technical staff for their cooperation and reaffirms the IMF's support to the government's efforts to implement their economic reform program."
Comments
Comments are closed.