Press Release No. 16/215

Press Release: IMF Staff Completes Review Mission to Pakistan

May 12, 2016

An International Monetary Fund (IMF) staff mission, led by Harald Finger, visited Dubai from May 2-11, 2016 to conduct discussions on the eleventh review of Pakistan’s economic program supported by a three-year IMF Extended Fund Facility (EFF) arrangement (See Press Release No. 13/322). The staff team met with Finance Minister Ishaq Dar, State Bank of Pakistan (SBP) Governor Ashraf Wathra, and other senior officials. At the conclusion of the mission, Mr. Finger issued the following statement:

“After productive discussions, the mission and the Pakistani authorities have reached staff-level agreement on the completion of the eleventh review under the EFF arrangement. The agreement is subject to approval by the IMF Management and the Executive Board. Upon completion of this review, SDR 360 million (about US$510 million) will be made available to Pakistan.

“Growth remains robust despite a weak cotton harvest, declining exports, and a more challenging external environment. Real GDP growth is expected to reach 4.5 percent in FY 2015/16 and 4.7 percent in FY 2016/17, helped by lower oil prices, rising investment, including related to the China Pakistan Economic Corridor (CPEC), improvements in energy supply, buoyant construction activity, and acceleration of credit growth. Headline consumer price inflation continued to rise, owing to diminishing effects of past declines in commodity prices, and is expected to reach around 4 percent by end of FY 2015/16, remaining well-anchored by continued prudent monetary policy. Gross international reserves reached US$16.1 billion in March 2016 covering close to four months of prospective imports.

“The mission welcomed the authorities’ strong program performance in the third quarter of FY2015/16. All end-March 2016 quantitative performance criteria, including the budget deficit target and the floor on the SBP’s net international reserves, have been met. The indicative targets on social spending under the Benazir Income Support Program (BISP) and power sector arrears have also been met. Tax revenue collection continued to grow at a healthy pace in the third quarter of FY2015/16, with the indicative target missed only by a small margin. Most structural benchmarks have also been met.

“The authorities’ reform efforts continue to strengthen macroeconomic stability, public finances, foreign exchange reserve buffers, and expanded protection of the most vulnerable under the Benazir Income Support Program (BISP). Further consolidation of these gains and strengthening the long-term resilience of the economy is the main priority in the period ahead. To this end, we welcome the authorities’ plans to continue with fiscal consolidation in the coming fiscal year, further expand the tax net, strengthen the fiscal responsibility framework, address financial losses in public enterprises, continue to pursue energy sector reforms, and accelerate competitiveness-enhancing improvements in the business climate. Completing these reforms will require continued effort well beyond the program period and will help set Pakistan on a permanently higher growth trajectory and achieve the country’s broader economic objectives.

“Discussions on the twelfth and last review under the program are tentatively planned for August. The mission thanks the authorities and technical staff for their cooperation and reaffirms the IMF’s support to the government’s efforts to implement their economic reform program.”