News Brief: IMF Completes Second Review Under Pakistan's Stand-By Arrangement
IMF News, July 11, 2001
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- Authors: Arrangement News Brief Related Links Pakistan
- Published: July 11, 2001
Review outcome and financing
- The Executive Board completed the second review under Pakistan's Stand-By Arrangement.
- Pakistan will be able to draw a further SDR 105 million (about US$131 million).
- Pakistan has so far drawn SDR 255 million (about US$324.6 million) under the Stand-By.
- The Stand-By Arrangement was first approved on November 29, 2000 (see Press Release No. 00/64).
Waivers and performance criteria
- The Executive Board approved waivers for:
- performance criteria on tax revenue collection; and
- the elimination of interest subsidy element of the export finance scheme under the Arrangement.
Assessment of program performance (statement by Eduardo Aninat, Deputy Managing Director and Acting Chairman)
- Achievements and macroeconomic outcomes:
- "Pakistan's achievements under the program supported by the Stand-By Arrangement have been encouraging."
- "The authorities have made a determined effort to implement the program, and most of the program targets have been achieved."
- "Inflation has been better than expected, and the budget deficit remains in line with program assumptions."
- "Economic activity was somewhat lower than expected because of severe drought, and this has contributed to lower-than-expected tax revenues and a weaker external balance."
- "The implementation of important structural reforms has been well on track."
Policy challenges and recommendations
- Fiscal policy and tax reform:
- Implement the recently announced 2001/02 budget.
- The 2001/02 budget includes a package of direct and indirect tax reforms aimed to:
- broaden the tax base;
- reduce distortions;
- strengthen incentives for investment; and
- reduce governance problems inherent to the current system.
- Planned improvements of tax administration are expected to help boost collections, a key precondition for containing the fiscal deficit while increasing social and development spending.
- External sector and exchange rate policy:
- Achieve targets for foreign exchange reserves.
- This will require good coordination of monetary and exchange rate policies and further progress toward a genuinely market-based exchange rate policy.
- Structural and governance reforms:
- Further improve governance in the management of public resources.
- Continue restructuring public enterprises.
- Strengthen the soundness of the financial system.
Source: IMF News Brief, July 11, 2001.