News Column

Extended Fund Facility IMF to release $550m for Pakistan

February 10, 2014

Xischan Javed

International Monetary Fund (IMF) will release $550 million for Pakistan under the Extended Fund Facility (EFF) after approval from Executive Board as scheduled in late March 2014.

After the successful completion of second review of Pakistan's IMF-supported program under the Extended Fund Facility (EFF), The IMF assured the Pakistani authorities to release of $550 million under Pakistan's IMF-supported program once after the approval of executive body.

An International Monetary Fund (IMF) staff mission, led by Jeffrey Franks, met with the Pakistan authorities in Dubai for discussions on the second review of Pakistan's IMF-supported program under the Extended Fund Facility (EFF) approved by the Executive Board of the IMF on September 4, 2013. The meeting was attended by Pakistan Federal Finance Minister, Senator Mohammad Ishaq Dar, acting Governor State Bank of Pakistan (SBP) Ashraf Wathra, Secretary Finance Dr. Waqar Masood Khan, and other senior officials.

The Pakistani authorities reaffirmed IMF mission about their commitment to adopt the necessary corrective actions, including measures to improve the financing of government debt through a medium-term strategy of institutional development and deepening of the government's securities market.

In a communiquÉ issued by IMF said that mission held after the constructive discussions with Pakistani economic managers\' of Pakistani government on the economic performance under the EFF program, mission reached staff-level understandings with the authorities on a set of economic policies detailed in an updated Letter of Intent, which will be subject to Executive Board approval.

The IMF mission acknowledged the government\'s efforts to deepen its support to the poor through expanding the Income Support Program (BISP), and other mechanisms, and welcomes its commitment to upgrade the delivery system to ensure timely payments to 4.9 million eligible families.

Pakistan's economy is showing signs of improved economic activity. Services and manufacturing are driving better-than-expected GDP growth, as reforms in the electricity sector seem to be bearing fruit with electricity shortages and unscheduled load-shedding declining.

Led by large scale manufacturing and service sectors, growth is picking up and is now expected to reach about 3.1 percent for FY2013/14 as a whole, compared to the earlier estimate of 2.8 percent. Fiscal performance continued on track in the second quarter of 2013/14, with initial consolidation efforts relying on revenue mobilization and reduction in energy subsidies. On the external side, while the SBP has continued its efforts to rebuild reserves, and the foreign exchange market has stabilized, pressures on the balance of payments are likely to persist for some months.

"The mission recognizes the authorities' resolve to pursue agreed structural reforms to enhance medium term growth prospects and rebuild foreign exchange reserves to underpin investor confidence. Timely implementation of reform measures articulated in the National Energy Policy is of high priority in ensuring affordable and reliable supply of energy. Recognizing that fixing Pakistan's energy problem calls for a medium term strategy of sustained reform, the authorities agreed to press forward with efforts to improve energy sector governance, promote private investment in electricity power generation and modernization, and transition to a market based system of gas pricing.

Furthermore the government's privatization agenda remains on track with capital market transactions for some companies, investments by strategic investors in others, and restructuring to improve resource allocation and limit poor performance. Decisive efforts to broaden the tax net through the elimination of tax exemptions and loopholes granted through Statutory Regulatory Orders (SROs) are critical to the future of Pakistan's economy.

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Source: Daily Frontier Post (Afghanistan)

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