Friday Nov 08, 2019
Pakistan and the International Monetary Fund (IMF) reached a staff-level agreement on the first review under the Extended Fund Facility on Friday, according to which Islamabad will receive another installment of US$450 million.
The international money lender issued a press release according to which the end-September performance criteria were met with "comfortable margins and that progress continues towards meeting all structural benchmarks".
The press release stated that the government's policies were starting to bear fruit as external and fiscal deficits were narrowing and inflation was expected to decline.
"Sustaining sound policies and advancing structural reforms remain key priorities to enhance resilience and pave the way for stronger and sustainable growth," it read.
An IMF mission led by Ernesto Ramirez Rigo visited Pakistan from November 8 to November 20. In his statement, Ramirez said:
“The Pakistani authorities and IMF staff have reached a staff-level agreement on policies and reforms needed to complete the first review under the EFF. The agreement is subject to approval by IMF management and the Executive Board of Directors. Completion of the review will enable disbursement of SDR 328 million (or around US$ 450 million) and will help unlock significant funding from bilateral and multilateral partners.”
Ramirez stated that economic stability was gradually taking place.
“On the macroeconomic front, signs that economic stability is gradually taking hold are steadily emerging. The external position is strengthening, underpinned by an orderly transition to a flexible, market-determined exchange rate by the State Bank of Pakistan (SBP) and a higher-than-expected increase in SBP’s net international reserves. Budgetary revenue collections are growing on the back of efforts on tax administration and policy changes, and despite the ongoing compression in import-related taxes. Inflation pressures are expected to recede soon, reflecting an appropriate monetary stance. Importantly, measures to strengthen the social safety net are being implemented, and development spending is been prioritized," he stated.
The IMF executive board approved a three-year, $6 billion loan package for Pakistan in July this year to rein in mounting debts and stave off a balance of payments crisis, in exchange for tough austerity measures.
In August, the board immediately disbursed around $1 billion. The remainder of the amount will be given to Islamabad over the term of the agreement.
The IMF mission concluded their visit to Pakistan by meeting Advisor to Prime Minister Imran Khan on Finance, Revenue and Economic Affairs, Abdul Hafeez Shaikh, on Friday.
The IMF delegation headed by Ernesto Ramirez visited Pakistan on November 8 and concluded it on November 20, read a press statement issued by the foreign office.
During the official visit, they also met the government’s financial team, provincial governments’ representatives and other stakeholders.
Ramirez praised Pakistan’s efforts to fulfil the goals set by IMF, read the press release.
The mission also appreciated financial reforms introduced by the country even when it faces severe challenges.
The next IMF economic survey is expected to take place in early 2020.