International Monetary Fund has released $102 million final installment of a 3-year loan to Pakistan, marking the first time the South Asian state has successfully completed a program with the global lending agency.
IMF approved a $6.6 billion loan for Pakistan in 2013 to save it from default on its external obligations. The loan was sought by the government of Prime Minister Nawaz Sharif following a landslide victory in the general election a few months earlier.
The meeting of IMF’s Executive Board which met in Washington to made a final review of the country’s economy under the 3-year Extended Fund Facility (EFF), approving the release of the 12th and final installment of the loan.
In a statement, issued after the meeting, Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair said that Pakistan’s Fund-supported program has helped the country restore macroeconomic stability, reduce vulnerabilities, and make progress in tackling key structural challenges.
“Economic growth has gradually increased and inflation has declined. External buffers have been bolstered, financial sector resilience has been reinforced, and the fiscal deficit has been reduced, while social safety nets have been strengthened,” the IMF official said, praising the authorities for its commitment to implement reforms under the program.
He, however, warned that significant challenges remain for Pakistan in the post-program period, and the authorities’ commitment to continue implementing strong policies to reinforce macroeconomic stability gains and advance growth-supporting reforms is to be commended.
“In light of the significant public debt burden, the authorities’ plan to further reduce the fiscal deficit is welcome. The 2016/17 budget and the revised fiscal responsibility framework can anchor fiscal policy in support of further gradual fiscal consolidation,” he said.
The fund said it would continue close fund engagement with Pakistan through policy dialogue in the context of regular consultations and post-program monitoring, along with ongoing technical assistance.