Press Release No. 15/578

Press Release: IMF Executive Board Completes Ninth Review Under the Extended Fund Facility for Pakistan

December 18, 2015

The Executive Board of the International Monetary Fund (IMF) on December 18, 2015 completed the ninth review of Pakistan’s economic performance under a 36-month program supported by an Extended Fund Facility (EFF) arrangement. The Executive Board’s decision enables the immediate disbursement of an amount equivalent to SDR 360 million (about US$498.1 million), bringing total disbursements to SDR 3.6 billion (about US$ 4.98 billion).

On September 4, 2013, the Executive Board approved the three-year extended arrangement under the EFF in the amount of SDR 4.393 billion (about U$S6.64 billion at the time of approval of the arrangement, or 425 percent of Pakistan’s quota at the IMF). (See Press Release No. 13/322).

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.

Following the Executive Board’s discussion of Pakistan, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair issued the following statement:

“Economic growth remains robust and near-term vulnerabilities have receded. The Pakistani authorities have taken corrective measures to foster the achievement of program objectives. 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.

“The authorities’ commitment to further strengthening the fiscal position and lowering public debt is welcome. 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. Efforts are underway to strengthen coordination with the provinces and improve public financial management to reduce fiscal risks.

“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 establishment of an independent monetary policy committee is a major welcome step. Sustained efforts are 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. 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 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.”