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February 16, 2020

Pakistan Expects Release of $506 Million Under EFF After Talks With IMF

Washington – Pakistan expects to get the next tranche of $506 million of a loan it secured from the International Monetary Fund in 2013 after the “successful” completion of the 7th review of the country’s economy.

The staff-level agreement has been reached with Pakistani officials after the weeklong talks held in Dubai and Islamabad and it will now be considered by the Executive Board in June, according to May 11 IMF statement issued in Washington. Harald Finger, IMF mission chief to Pakistan, led  his team at the talks.

“Pakistan’s economy continues to gradually improve, helped by macroeconomic stability, lower oil prices, robust remittances, and higher supply of gas and electricity,” the IMF statement said.  “Real GDP growth is expected to reach 4.1 percent this fiscal year and accelerate to 4.5 percent next year. Average headline inflation dropped to 2.1 percent in April, but is expected to increase in the coming months reflecting.”

Pakistan secured the $6.6 billion from the IMF in September 2013 under the Extended Fund Facility to stave off a balance of payment crisis.

Pakistan’s Finance Minister Ishaq Dar, who led his team at the talks, told a news briefing in Islamabad the country had reached the level of 7th review for the first time under any program, state-owned Radio Pakistan reported on its official website. Pakistan’s all previous programs with the fund were terminated prematurely after the respective governments failed to meet set conditions.

The South Asia’s second-biggest economy has shown signs of improvement in recent months leading to the up-gradation of its credit-ranking last week  to positive from stable by Standard and Poor’s, affirming a B-rating.

Dar said the government was on its way to achieve the 4.9 percent fiscal deficit target for the year ending June 30, with the next year target to be kept at 4.3 percent.

Current account deficit that has remained over two percent of the gross domestic product over the past few years is likely to be below one percent his year due to decline in global oil prices and increase in remittances by overseas Pakistanis who sent $14.97 billion in the first ten months of the current fiscal year to April.

Pakistan’s tax revenue collection rose by 12.8 percent to 1,969 billion rupees in the first ten months from 1,745 billion in the same period of last year, Dar said. The country’s foreign exchange reserves stood at 17.6 billion rupees, he added.

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