Pakistani and the International Monetary Fund have successfully completed review of the country’s economy which will lead to the release of $500 million tranche of a loan under the Extended Fund Facility.
The IMF and Pakistan officials met in Dubai for the tenth review of the EFF program that enabled Pakistan to secure $6.4 billion loan in 2013 to stave off an imminent default on the country’s external commitment.
“Completion of the Tenth Review is indicative of government’s commitment in implementing structural reforms in areas of taxation, energy, monetary/financial sectors and public sector enterprises,” an official statement said at the end of negotiations on Feb.4.
Pakistan met all of the end-December 2015 Quantitative Performance Criteria – SBP’s Net Domestic Assets, Net International Reserves, Foreign currency swap/forward position by significant margins.
Similarly, the Quantitative Performance Criteria on government borrowing from the SBP and budget deficit for end-December, 2015 have been over performed underlining government’s commitment to sustained fiscal consolidation.
The agreement reached between the Pakistani and IMF officials noted that Pakistan achieved the gross domestic product growth of 4.24 percent in FY 2014/15, which is highest in the last 7 years.
While IMF has projected a growth rate of 4.5 percent in FY 2015/16, Pakistan is aiming to achieving 5.5 percent growth in the fiscal year ending June 30. Decline in cotton production remains a challenge to achieve the desired growth
Large-scale manufacturing remained robust at 4.43 percent during Jul-Nov 2015-16 compared to 3.15 percent last year. The major sectors like Automobiles registered growth at 32.3 percent followed by Fertilizers 15.2 percent, Chemicals 11.0 percent, and Rubber Products 9.3 percent.
Cement dispatches witnessed uptick during first half of the current fiscal year; and credit expansion during Jul-Jan 2015-16 remained above 100 percent along with improvement in electricity and gas supplies indicating robust economic activities and reflecting investor confidence.
Pakistan’s inflation continued on a downward trajectory. Consumer inflation fell from 8.62 percent in FY 2013-14 to 4.53 percent in FY 2014-15. During first six months (Jul-Dec) of FY 2015-16, CPI inflation has been further contained at 2.1 percent — the lowest inflation in last 12 years.
Stable increase in workers’ remittances and low oil price continued to help contain the current account deficit. As of 29 Jan 2016, country’s foreign reserves stood at $20.2 billion – SBP reserves at $15.43 billion and those with commercial banks, $4.84 billion.