Washington – The International Monetary Fund (IMF) has reached a staff-level agreement with Pakistan after the completion of 9th review of its economic performance under an IMF loan program, paving the way for the release of about $502 million.
The agreement was reached after a series of meeting between IMF team, headed by Harald Finger and Pakistan officials led by Finance Minister Ishaq Dar. The meetings were held during October 25-November 5 in Islamabad and Dubai.
The review is part of $6.6 billion loan Pakistan secured in 2013 under IMF’s Extended Fund Facility to stave off an imminent balance of payment crisis. A review is needed before the release of next tranche.
The IMF Executive Board needs to endorse the staff-level agreement before the release of the next tranche which, Finance Minister Dar said, will likely be disbursed by mid-December.
Addressing a press briefing in Islamabad, Dar said that Pakistan has achieved all economic targets while the government is working on areas that needed improvement including the tax collection and keeping the budget deficit in control.
In a statement, IMF official Finger said the government has shown commitment to the economic reforms under the IMF program.
“Economic activity continues to improve while challenges remain. Real GDP is expected to grow by about 4.5 percent in FY 2015/16, helped by lower oil prices, planned improvements in the supply of energy, and investment related to the China Pakistan Economic Corridor (CPEC),” he said.
Finger, however, cautioned that at the same time slowing private sector growth and weakness in exports and imports could pose risks to growth prospects.
Headline consumer inflation is also expected to rise to around 4.5 percent as the impact of lowering commodity prices gradually erodes. Gross international reserves reached US$15.2 billion by end-September 2015, up from US$13.5 billion at end-June 2015 and covering close to four months of prospective imports.
“The mission welcomes the authorities’ continued commitment to their IMF-supported economic reform program, which has significantly reduced near-term risks,” Finger said.
While Pakistan achieved most of the set targets under the review, it missed the performance criteria on fiscal deficit.