IMF approves USD 504 million for Pakistan

From Sajjad Hussain Islamabad, Jun 27: The International Monetary Fund has approved USD 506.4 million loan tranche to Pakistan as part of a three-year bailout programme to support the country's economic reforms and growth.

The IMF Executive Board took the decision yesterday in Washington after the seventh review of Pakistan's economy for the period of January-March, 2015. The Express Tribune reported that it paved the way for release of the eighth loan tranche of USD 506.4 million that will be made available to Islamabad next week.

In September 2013, the IMF had approved a three-year Extended Fund Facility amounting to USD 6.6 billion. With the fresh approval, the IMF's total disbursements since September 2013 have come to USD 4.1 billion. So far, the focus of the IMF remained on quantitative targets, but now the IMF wants to shift to critical structural reforms. The IMF board also approved changes in Net International Reserves (NIR) targets for two quarters.

The IMF counts the NIR by excluding all foreign currency reserves related liabilities. Pakistan had met all the conditions for January-March period and like the sixth review, it did not require any waiver from the executive board this time.

However, in first five reviews, the IMF gave ten waivers to keep the bailout programme on track, as the government's performance remained mixed in areas of reducing its budgetary borrowings from the central bank and building foreign currency reserves.

Pakistan has made encouraging progress towards improving its economic resilience, and imbalances continue to be addressed, said IMF Mission Chief to Islamabad Harald Finger.

While placing emphasis on undertaking structural reforms in the remainder period of the programme, Finger said that "important elements will include quick and decisive implementation of energy sector reforms, broadening the tax base, restructuring of state-owned enterprises, and improving the business climate".

PTI