WASHINGTON - The Executive Board of the International Monetary Fund (IMF) approved disbursement of an amount $498.1 million for Pakistan after completing the ninth review of Pakistan’s economic performance under a 36-month program supported by an Extended Fund Facility (EFF) arrangement.
On September 4, 2013, the board approved the three-year extended arrangement under the EFF in the amount of $6.64 billion. In completing the review, the board also approved the authorities’ request for waivers of non-observance of the end-September 2015 performance criteria on the ceiling on overall budget deficit and the ceiling on net domestic assets of the State Bank of Pakistan (SBP), as well as modification of the end-December 2015 performance criterion on net domestic assets of the SBP.
Following the Executive Board’s discussion of Pakistan, Deputy Managing Director and Acting Chair of the IMF Mitsuhiro Furusawa in a statement said that economic growth remained robust and near-term vulnerabilities had receded. He said that the Pakistani authorities had taken corrective measures to foster the achievement of program objectives. Prudent macro-economic policies and sustained implementation of the reform agenda were important to reinforce gains in economic stability and generate a strong and sustainable growth.
“The authorities’ commitment to further strengthening the fiscal position and lowering public debt was welcome. The focus was appropriately placed on revenue mobilisation, including broadening the tax base and improving tax collection and compliance, with a view to creating fiscal space for pro-growth spending and greater social protection. Efforts were underway to strengthen coordination with the provinces and improve public financial management to reduce fiscal risks” the statement said.
He said that low oil prices present a unique opportunity to strengthen external stability. Further accumulation of foreign exchange reserves would help enhance the economy’s resilience. The establishment of an independent monetary policy committee was a major welcome step. Sustained efforts were needed to further improve the monetary policy framework, reduce fiscal dominance, and strengthen central bank independence.
Mitsuhiro Furusawa said that authorities remain committed to safeguarding financial stability. Priorities include reinforcing the supervisory framework, boosting bank capitalisation, and improving access to finance. Preparatory work had progressed well for the introduction of credit bureaus and a deposit insurance scheme. It would be important to continue to strengthen corporate restructuring, insolvency, and collateral frameworks, as well as Pakistan’s regime against money laundering and the financing of terrorism.
He was of the opinion that the momentum of structural reforms must be maintained to achieve higher, sustainable and more inclusive growth. Critical priorities include reducing arrears and increasing supply in the energy sector, restructuring and privatizing loss-making public enterprises, improving the business climate and competitiveness, further strengthening social protection, and increasing female labor force participation.