KARACHI: The International Monetary Fund (IMF) concluded the first economic review of the country under the Extended Fund Facility (EFF), said Prime Minister’s Adviser on Finance and Revenue, Dr. Abdul Hafeez Shaikh, in a Twitter post on Friday, adding that the international financial institution acknowledged that the country had met all performance benchmarks by significant margins.
“Positive for Pakistan!” Shaikh tweeted. “IMF Mission concludes successfully. IMF confirms that Pakistan met all First Quarter Performance Criteria by good margins and economy continuing to get better. Thank you PM and the entire team!”
Pakistan and the IMF also announced on Friday they had reached a staff-level agreement on the basis of the economic review, clearing the way for the second tranche of $450 million.
“The agreement is subject to approval by IMF management and the Executive Board of Directors,” Ernesto Ramirez Rigo, the IMF mission chief to Pakistan, said in a statement. “Completion of the review will enable disbursement of SDR328 million (or around $ 450 million) and will help unlock significant funding from bilateral and multilateral partners.”
Positive for Pakistan! IMF Mission concludes successfully. IMF confirms that Pakistan met all First Quarter Performance Criteria by good margins and economy continuing to get better. Thank you PM and the entire team!
— Dr. Abdul Hafeez Shaikh (@a_hafeezshaikh) November 8, 2019
The IMF team was visiting the country to review progress on the $6 billion bailout program extended in July this year to stabilize the wobbling economy of the South Asian nation.
Pakistan had received the first tranche of $995 million in July 2019 following the implementation of prior actions that Islamabad agreed to as part of the conditions attached to the bailout program.
The fund acknowledged that Islamabad had met all performance criteria set for end-September with comfortable margins and progress continued toward meeting all structural benchmarks.
“Despite a difficult environment, program implementation has been good, and all performance criteria for end-September were met with comfortable margins. Work continues toward completing the remaining structural benchmarks for end-September,” Rigo said.
“Significant progress has been made in improving the AML/CFT [Anti-Money Laundering/Countering Terrorism Financing] framework, although additional work is needed before March 2020. International partners remain committed to supporting the authorities’ reform efforts, providing the necessary financing assurances.”, he added.
The IMF observed that signs of economic stability were gradually beginning to emerge on the macroeconomic front. It added that the external position was strengthening, underpinned by an orderly transition to a flexible, market-determined exchange rate by the State Bank of Pakistan (SBP) and a higher-than-expected increase in the SBP’s net international reserves.
“Budgetary revenue collections are growing on the back of efforts on tax administration and policy changes, and despite the ongoing compression in import-related taxes,” Rigo said.
According to the IMF mission chief, inflation pressures are expected to recede soon, reflecting an appropriate monetary stance. Importantly, measures to strengthen the social safety net are being implemented, and development spending is being prioritized.
The mission chief at the concluding meeting of the review met with the government team, led by Dr. Abdul Hafeez Shaikh, and praised the “government for introducing far reaching economic reforms in a challenging environment,” the finance ministry said in a statement on Friday.
The IMF mission will arrive in Pakistan early next year to conduct the next program review.