IMF Staff Completes Twelfth and Final Review Mission to Pakistan
IMF News, August 4, 2016
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- IMF Staff Completes Twelfth and Final Review Mission to Pakistan
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Bibliographic details
- Published: August 4, 2016
Mission outcome
- An IMF staff mission led by Harald Finger visited Dubai from July 26 – August 4, 2016 to conduct discussions on the twelfth and final review of Pakistan’s economic program under a three-year IMF Extended Fund Facility (EFF) arrangement.
- The mission and the Pakistani authorities reached staff-level agreement on the completion of the twelfth and final review under the EFF arrangement.
- The staff-level agreement is subject to approval by IMF Management and the Executive Board.
- Upon completion of this review, SDR 73 million (about US$102 million) will be made available to Pakistan.
Economic outlook and key statistics
- Growth is expected to reach 5 percent in FY 2016/17, supported by buoyant construction activity, strengthened private sector credit growth, and an investment upturn related to the China Pakistan Economic Corridor (CPEC).
- Average inflation is expected at around 5.2 percent in FY 2016/17, remaining well-anchored by continued prudent monetary policy.
- Gross international reserves reached US$18.1 billion at end-June 2016, covering over four months of prospective imports.
- SDR disbursement on review completion: SDR 73 million (about US$102 million).
Program performance and implementation
- Program performance in the fourth quarter of FY2015/16 was described as solid.
- Most end-June 2016 quantitative performance criteria (PCs) were met.
- The ceilings on the budget deficit and net domestic assets (NDA) of the State Bank of Pakistan (SBP) were exceeded by small margins; the authorities committed to take remedial actions.
- All indicative targets and structural benchmarks (SB) were met, except for the delayed notification of multi-year tariffs for three power distribution companies.
Progress during IMF-supported program
- Achievements cited:
- Growth gradually accelerated.
- International reserve buffers were rebuilt.
- The budget deficit narrowed significantly, helped by sizeable growth in tax revenue.
- Inflation declined, helped by lower oil prices and improved monetary and fiscal policies.
- Regulatory reforms and improved energy sector performance slowed the accumulation of arrears and began to reduce outages.
- Coverage under the Benazir Income Support Program (BISP) expanded, and stipends increased by over 60 percent.
- Regulations to fight money-laundering and financing of terrorism were strengthened.
- Authorities advanced, despite some delays, work toward restructuring and divesting ailing public sector enterprises (PSEs).
Policy recommendations and near-term priorities
- To consolidate and reinforce gains achieved in the last three years, the economic reform agenda needs to continue after the program ends.
- Specific areas identified as important:
- Further strengthen public finances and external buffers.
- Broaden the tax net.
- Improve public financial management.
- Strengthen the monetary policy framework.
- Address losses in public sector enterprises (PSEs).
- Complete the energy sector reforms.
- Accelerate competitiveness-enhancing improvements of the business climate, including the trade regime.
- Continued progress with these reforms is described as critical to reinforce the authorities’ achievements under the IMF-supported program.
IMF statement and next steps
- The mission thanked the authorities and technical staff for the constructive dialogue over the past three years.
- The IMF reaffirmed its ongoing support for Pakistan, including through continued policy dialogue and technical assistance.
- Staff will prepare a report, based on the preliminary findings of the mission, that—subject to management approval—will be presented to the IMF's Executive Board for discussion and decision.
IMF press release dated August 4, 2016 — Press Release No. 16/373