Fund acknowledges economic activity and external position of Pakistan continue to improve, driven by prudent monetary and fiscal policies.
Following review of Pakistan’s economic performance, the IMF staff mission has recommended release of $518 million to Islamabad, as the Fund acknowledged improved economic activity in the country.
An International Monetary Fund team, led by Jeffrey Franks, met with Finance Minister Ishaq Dar in Dubai, and other members of the Pakistani delegation and held discussions on the sixth review under Pakistan’s $6.6 billion Extended Fund Facility (EFF). The mission and the Pakistani authorities have reached staff-level understandings on a Memorandum of Economic and Financial Policies on the sixth review of the program, which, upon approval by the IMF’s Management, will be discussed by the IMF Executive Board. Upon completion of the review, SDR 360 million (about US$518 million) would be made available to Pakistan, Franks said in a statement, released by the Funds Headquarters in Washington.
Economic activity and the external position continue to improve, driven by prudent monetary and fiscal policies and helped by lower oil prices and robust remittances. Financial sector indicators remain sound. In fiscal year (FY) 2014/15, real GDP growth is expected to be over 4 percent with headline inflation remaining low. The external current account deficit will narrow to around 1.2 percent of GDP despite a decline in exports driven by lower cotton prices and real exchange rate appreciation. These developments, along with strong capital inflows and the recent Sukuk placement, have allowed further strengthening of the foreign exchange reserve buffers, which reached US$ 10.5 billion at end-December 2014.
The authorities reform program remains on track. All end-December 2014 quantitative performance criteria were met, as well as the indicative target on transfers under the Benazir Income Support Program (BISP). The end-December structural benchmark for this review on submission of Anti-Money Laundering (AML) legislative amendments was also met, the Fund noted. Finance Minister Ishaq Dar on Thursday said Pakistan and International Monitory Fund (IMF) had successfully completed the negotiations on the Sixth Review under the 3-year Extended Fund Facility (EFF) programme for an amount of $6.64 billion. This will enable IMF to go to their board for the release of seventh tranche of about $518 million, Finance Minister announced this while addressing a press conference along with IMF Mission Chief, Jeffrey Franks in Dubai.