Press Release No. 15/443

Press Release: IMF Executive Board Completes Eighth Review under the EFF for Pakistan

September 29, 2015

The Executive Board of the International Monetary Fund (IMF) on September 28, 2015 completed the eighth review of Pakistan’s economic performance under a 36-month program supported by an Extended Fund Facility (EFF) arrangement. The Executive Board’s decision enables the immediate disbursement of an amount equivalent to SDR 360 million (about US$504.8 million), bringing total disbursements to SDR 3.24 billion (about US$4.54 billion).

On September 4, 2013, the Executive Board approved the three-year extended arrangement under the EFF in the amount of SDR 4.393 billion (about U$S6.64 billion at the time of approval of the arrangement, or 425 percent of Pakistan’s quota at the IMF). (See Press Release No. 13/322).

In completing the review, the Executive Board also approved the authorities’ request for waivers of non-observance of the end-June 2015 performance criteria on the ceiling on overall budget deficit and the ceiling on net government budget borrowing from the State Bank of Pakistan (SBP), as well as modification to adjust the end-September 2015 performance criterion on net domestic assets of the SBP target.

Following the Executive Board discussion on Pakistan, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, said:

“Economic activity is picking up pace and vulnerabilities are gradually receding. Continued prudent policies and reform efforts are necessary to lock in the gains so far in macroeconomic stability and reinforce the foundation for sustained high growth.

“The authorities’ commitment to strengthening Pakistan’s fiscal position is welcome. Further steps to increase revenue mobilization, including by broadening the tax base and strengthening tax administration, remain key to generating resources for priority spending and greater social protection. Strengthening coordination with the provinces will also help safeguard fiscal discipline.

“Foreign exchange reserves have continued to increase, benefitting from windfalls from lower import prices. Additional efforts are needed to further strengthen external buffers. The central bank’s new interest rate corridor represents a major step to improve the monetary policy framework which would further benefit from greater central bank autonomy. In this regard, an early adoption of pending legislation would bolster governance and the credibility of monetary policy. Beyond this, further progress is also needed to address the remaining recommendations of the 2013 Safeguards Assessment report.

“Progress with bank capitalization and efforts to facilitate foreclosures and corporate restructuring are bolstering financial stability. Further strengthening Pakistan’s regime against money laundering and the financing of terrorism remains an important policy priority for the authorities.

“The momentum of structural reform must be maintained to achieve high and durable growth over the medium term. In particular, reforms should aim at securing a reliable supply of electricity and gas, and reducing fiscal risks posed by these sectors. An accelerated pace of privatization and restructuring of public enterprises as well as regulatory reform will also go a long way toward improving the business climate and supporting private sector-led activity.”