IMF okays $510m for Pakistan

Dubai—International Monetary Fund (IMF) said on Thursday it had reviewed Pakistan’s economic performance and will make available a further $510 million to the country as part of a three-year, $6.7 billion financial assistance programme.
The money will be provided when the review is approved by the IMF’s management and executive board, the Fund said in a statement, describing its discussions with Pakistan as “productive” and adding that performance criteria in the programme had been met.
This was announced at a Joint Press Conference of Senator Mohammad Ishaq Dar, Finance Minister and Mr. Harald Finger, IMF Mission Chief on successful completion of Eleventh Review under IMF Extended Fund Facility Programme.
“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,” said Harald Finger, the Fund’s mission chief for Pakistan.
The statement said that growth has remained robust despite a weak cotton harvest and declining exports amid a more challenging global 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 favorable 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.”
IMF stated that 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 agreement was reached after the IMF mission held discussions with Finance Minister Ishaq Dar, SBP Governor Ashraf Wathra and other senior officials in Dubai from May 2 to May 11.
Finance Minister Ishaq Dar said our performance on the Eleventh Review has been highly satisfactory. We met all of the end-March 2016 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-March, 2016 have been over performed underlining government’s commitment to sustained fiscal consolidation.
He said the indicative target for end-March, 2016 on targeted cash transfers through BISP and on power sector arrears were also met.
FBR not only achieved its third quarter target of Rs. 715 billion but exceeded it, thus wiping out almost the entire shortfall recorded in the FBR collection for the first quarter. This indeed is a remarkable achievement as for the first time after several years, no downward revision has been made in FBR targets and we are on course to achieving the originally fixed targets. Against the indicative target of Rs. 2105 billion for the first nine months of the year, FBR has collected Rs. 2103 billion. The collections improved by around 19 percent as compared to the last fiscal year.
Dar said we achieved real GDP growth rate of 4.24 percent in FY 2015, which is the highest in the last 7 years. In view of the damage to the cotton crop, the growth rate for the current year is expected to be around 5 percent, which will be an 8 year high. For the next fiscal year, growth is projected at over 6 percent in our macroeconomic framework.
He said LSM growth remained robust at 4.4 percent during Jul-Feb 2016 compared to 2.4 percent last fiscal year. The LSM growth is the highest in the last 8 years.
Major sectors like Automobiles registered growth at 28 percent followed by Fertilizers 16 percent, Rubber products 11.6 percent, Leather products 11.5 percent, and Chemicals 11.2 percent. Cement dispatches witnessed uptick by over 19 percent and there has been a continued credit expansion. A welcome development is the increase in fixed investment. Electricity and gas supplies continued to improve since the start of the current fiscal year. The CPEC will also play a significant role in further boosting economic activities.
The Finance Minister said the Pakistan Stock Exchange (PSX) has scaled new height of 36,265 index on 10th May, 2016 crossing the highest index achieved previously in August, 2015 indicating robust economic activity and reflecting investor confidence.—INP

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