WASHINGTON (APP) – The International Monetary Fund on Friday approved the immediate disbursement of about $498.1 million to Pakistan, appreciating the government’s prudent economic policies and its commitment to strengthen the fiscal position and lower public debt.
The approval to release the loan installment was given by the IMF Executive Board which met in Washington today to complete the ninth review of economic performance under a three-year program.
The approval of the latest instalment brought the total disbursement to about $4.98 billion of a $6.64 billion loan extended to Pakistan under the Extended Fund Facility in 2013.
“Economic growth remains robust and near-term vulnerabilities have receded. The Pakistani authorities have taken corrective measures to foster the achievement of program objectives,” said Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair in a statement issued after the meeting in Washington.
“Prudent macroeconomic policies and sustained implementation of the reform agenda are important to reinforce gains in economic stability and generate a strong and sustainable growth,” he said.
He welcomed the commitment of the government to further strengthening the fiscal position and lowering public debt. “The focus is appropriately placed on revenue mobilization, including broadening the tax base and improving tax collection and compliance, with a view to creating fiscal space for pro-growth spending and greater social protection.”
The statement noted the efforts underway to strengthen coordination with the provinces and improve public financial management to reduce fiscal risks.
In completing the review, the Executive Board also approved the authorities’ request for waivers of non-observance of the end-September 2015 performance criteria on the ceiling on overall budget deficit and the ceiling on net domestic assets of the State Bank of Pakistan (SBP), as well as modification of the end-December 2015 performance criterion on net domestic assets of the SBP.
“Low oil prices present a unique opportunity to strengthen external stability. Further accumulation of foreign exchange reserves would help enhance the economy’s resilience,” the IMF said.
The IMF board welcomed the establishment of an independent monetary policy committee and said that sustained efforts were needed to further improve the monetary policy framework, reduce fiscal dominance, and strengthen central bank independence.
The authorities remain committed to safeguarding financial stability. Priorities include reinforcing the supervisory framework, boosting bank capitalization, and improving access to finance.
The IMF said that preparatory work has progressed well for the introduction of credit bureaus and a deposit insurance scheme. It will be important to continue to strengthen corporate restructuring, insolvency, and collateral frameworks, as well as Pakistan’s regime against money laundering and the financing of terrorism, the statement added.
“The momentum of structural reforms must be maintained to achieve higher, sustainable, and more inclusive growth. Critical priorities include reducing arrears and increasing supply in the energy sector, restructuring and privatizing loss-making public enterprises, improving the business climate and competitiveness, further strengthening social protection, and increasing female labor force participation.”