IMF Statement on Pakistan

Thomas C. Dawson, Director of External Relations at the International Monetary Fund (IMF), issued the following statement today on Pakistan:

"A Pakistani delegation to Washington held policy discussions with IMF staff on a medium-term economic reform strategy that could be supported under a three-year Poverty Reduction and Growth Facility (PRGF) arrangement. Fund staff is highly satisfied with the progress made towards agreement on the macroeconomic policy stance and structural reforms called for under the current difficult circumstances. Key elements of Pakistan's reform program aim at improving delivery of basic social services and creating a more investor and growth friendly environment.

"The Pakistani authorities are still discussing the bilateral and multilateral sources of external financing needed to underpin the program and to help Pakistan cope with the economic and financial fall-out of the events in Afghanistan, such as higher insurance costs for exports and imports, as well as weaker world demand. Further discussions will be held with Finance Minister Aziz in Paris this week with the intention to proceed speedily toward an agreement in the period immediately ahead," Mr. Dawson stated.

The IMF's concessional facility for low-income countries, the Enhanced Structural Adjustment Facility (ESAF), was renamed in November 1999 the Poverty Reduction and Growth Facility, and its purposes were redefined. It is intended that PRGF-supported programs will be based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a poverty reduction strategy paper. This is intended to ensure that each PRGF-supported program is consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. PRGF loans carry an interest rate of 0.5 percent a year, and are repayable over 10 years with a 5½-year grace period on principal payments.