{
  "title": "Press Release: IMF Executive Board Approves US$7.6 Billion Stand-By Arrangement for Pakistan",
  "publication": "IMF News, November 24, 2008",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr08303",
  "canonical": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr08303",
  "overlayPath": "/en/news/articles/2015/09/14/01/49/pr08303/index.md",
  "summary": "The Executive Board approved a 23-month Stand-By Arrangement for Pakistan equivalent to SDR 5.169 billion (about US$7.6 billion).",
  "publishDate": "2008-11-24",
  "sections": [
    {
      "heading": "IMF arrangement approval and financing terms",
      "content": "- The Executive Board approved a 23-month Stand-By Arrangement for Pakistan equivalent to SDR 5.169 billion (about US$7.6 billion).\n- Upon Board approval, SDR 2.067 billion (about US$3.1 billion) becomes immediately available to Pakistan; the remaining amount will be phased in, subject to quarterly reviews.\n- The total IMF resources made available under the arrangement equal 500 percent of the country's quota.\n- The arrangement was approved under the Fund's fast-track Emergency Financing Mechanism procedures."
    },
    {
      "heading": "Program objectives and overarching strategy",
      "content": "- Two key objectives:\n  - Restore macroeconomic stability and confidence through a tightening of macroeconomic policies.\n  - Ensure social stability and adequate support for the poor and vulnerable in Pakistan.\n- The program seeks to achieve these interrelated objectives by combining fiscal consolidation, tighter monetary policy, and strengthened social assistance."
    },
    {
      "heading": "Fiscal policy measures and targets",
      "content": "- The program targets a significant reduction in the fiscal deficit:\n  - Fiscal deficit will be reduced from 7.4 percent of GDP in 2007/2008 (July-June) to 4.2 percent in 2008/2009 and 3.3 percent in 2009/2010.\n- Primary fiscal stance:\n  - Primary balance targeted at 0.6 (2008/2009) and 1.6 (2009/2010) percent of GDP as shown in the program summary table.\n- Main fiscal measures to achieve the adjustment:\n  - Phasing out energy subsidies.\n  - Better prioritizing development spending.\n  - Implementing strong tax policy and tax administration reforms.\n- Central bank financing of the government will be eliminated."
    },
    {
      "heading": "Monetary policy, exchange rate, and banking-sector measures",
      "content": "- Monetary tightening to bring down inflation and strengthen international reserves.\n- The State Bank of Pakistan recently increased its discount rate by 200 basis points to 15 percent, and stands ready to further tighten monetary conditions as needed.\n- Structural actions include:\n  - Designing contingency plans to address problem banks.\n  - Measures to improve monetary management.\n  - Strengthening the SBP's bank resolution capacity.\n- Exchange rate policy:\n  - Pursue a flexible exchange rate policy, with intervention in the foreign exchange market geared toward achieving reserve targets and smoothing excessive exchange rate volatility."
    },
    {
      "heading": "Social protection and external support",
      "content": "- Strengthening and better targeting of social assistance is essential.\n- Social safety net spending will be increased by 0.6 percentage point of GDP, to 0.9 percent of GDP in 2008/2009.\n- Authorities plan to put in place a comprehensive and effectively-targeted social safety net in close cooperation with the World Bank.\n- The IMF's financial support is intended to signal improved macroeconomic prospects and help mobilize additional donor financial support to consolidate reserves and finance the expanded social safety net.\n- The program allows for additional development spending if external assistance is higher than projected."
    },
    {
      "heading": "Recent economic developments (Annex summary)",
      "content": "- Macroeconomic deterioration since mid-2007 driven by:\n  - Adverse security developments.\n  - Large exogenous price shocks, notably increases in oil and food import prices.\n  - Global financial turmoil.\n  - Policy inaction during the political transition and large central bank financing of the fiscal deficit.\n- Consequences observed:\n  - Slower growth.\n  - Higher inflation.\n  - Sharp deterioration of the external position.\n- Authorities requested IMF financial assistance to restore macroeconomic stability while protecting the poor and vulnerable."
    },
    {
      "heading": "Key macroeconomic indicators (2004/05–2009/10) — selected entries from Pakistan: Main Economic Indicators, 2004/05-2009/10 1/",
      "content": "- Real GDP (change in percent):\n  - 2004/05: 9.0\n  - 2005/06: 5.8\n  - 2006/07: 6.8\n  - 2007/08: 3.4\n  - 2008/09 (Proj.): 5.0\n- CPI (average):\n  - 2004/05: 9.3\n  - 2005/06: 7.9\n  - 2006/07: 7.8\n  - 2007/08: 12.0\n  - 2008/09 (Proj.): 23.0\n  - 2009/10 (Proj.): 13.0\n- CPI (end year):\n  - 2004/05: 8.7\n  - 2005/06: 7.6\n  - 2006/07: 7.0\n  - 2007/08: 21.5\n  - 2008/09 (Proj.): 20.0\n  - 2009/10 (Proj.): 6.0\n- Gross national saving (percent of GDP):\n  - 2004/05: 17.7\n  - 2005/06: 17.8\n  - 2006/07: 18.2\n  - 2007/08: 12.9\n  - 2008/09 (Proj.): 13.5\n  - 2009/10 (Proj.): 15.7\n- Gross capital formation (percent of GDP):\n  - 2004/05: 19.1\n  - 2005/06: 21.7\n  - 2006/07: 21.3\n- General government (percent of GDP) — selected rows:\n  - Overall balance (excluding grants):\n    - 2004/05: -3.3\n    - 2005/06: -4.3\n    - 2006/07: -7.4\n    - 2008/09 (Proj.): -4.2\n  - Primary balance:\n    - 2004/05: 0.2\n    - 2005/06: -0.6\n    - 2006/07: -2.5\n    - 2008/09 (Proj.): 0.6\n    - 2009/10 (Proj.): 1.6\n  - Debt:\n    - 2004/05: 61.2\n    - 2005/06: 55.8\n    - 2006/07: 54.1\n    - 2007/08: 57.9\n    - 2008/09 (Proj.): 54.6\n    - 2009/10 (Proj.): 52.4\n- Money and credit (end-of-period, percent change):\n  - M2:\n    - 2004/05: 19.3\n    - 2005/06: 14.9\n    - 2006/07: 15.3\n    - 2007/08: 10.8\n    - 2008/09 (Proj.): 15.9\n  - Credit to non-government:\n    - 2004/05: 33.2\n    - 2005/06: 23.2\n    - 2006/07: 17.2\n    - 2007/08: 16.4\n    - 2008/09 (Proj.): 25.2\n    - 2009/10 (Proj.): 19.5\n- Interest rates (percent) — Six-month treasury bill rate (average, in percent):\n  - 2004/05: 4.7\n  - 2005/06: 8.2\n  - 2006/07: 8.8\n  - 2007/08: 11.0\n- Balance of payments:\n  - Current account (in percent of GDP):\n    - 2004/05: -1.4\n    - 2005/06: -3.9\n    - 2006/07: -4.8\n    - 2007/08: -8.4\n    - 2008/09 (Proj.): -6.5\n    - 2009/10 (Proj.): -5.7\n  - External debt (in percent of GDP):\n    - 2004/05: 31.3\n    - 2005/06: 28.0\n    - 2006/07: 26.9\n    - 2007/08: 26.5\n    - 2008/09 (Proj.): 31.4\n- Reserves (in millions of U.S. dollars) 2/:\n  - 2004/05: 9,805\n  - 2005/06: 10,765\n  - 2006/07: 14,302\n  - 2007/08: 8,591\n  - 2008/09 (Proj.): 11,291\n- Exchange regime: Managed float\n- Present rate (November 21, 2008): PRs 79.3 = US$ 1\n- Real effective rate, CPI basis (annual average, 2000=100):\n  - 2004/05: 5.3\n  - 2005/06: 0.5\n  - 2006/07: -0.8\n- Quota at the Fund: SDR 1,033.7 million\n\nPress Release No. 08/303 (November 24, 2008).\n\n---\n\n\n References\n\n- Pakistan and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr08303"
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    "Published: November 24, 2008",
    "The Executive Board approved a 23-month Stand-By Arrangement for Pakistan equivalent to SDR 5.169 billion (about US$7.6 billion).",
    "Upon Board approval, SDR 2.067 billion (about US$3.1 billion) becomes immediately available to Pakistan; the remaining amount will be phased in, subject to quarterly reviews.",
    "The total IMF resources made available under the arrangement equal 500 percent of the country's quota.",
    "The arrangement was approved under the Fund's fast-track Emergency Financing Mechanism procedures.",
    "Two key objectives:",
    "The program seeks to achieve these interrelated objectives by combining fiscal consolidation, tighter monetary policy, and strengthened social assistance.",
    "The program targets a significant reduction in the fiscal deficit:",
    "Primary fiscal stance:",
    "Main fiscal measures to achieve the adjustment:",
    "Central bank financing of the government will be eliminated.",
    "Monetary tightening to bring down inflation and strengthen international reserves.",
    "The State Bank of Pakistan recently increased its discount rate by 200 basis points to 15 percent, and stands ready to further tighten monetary conditions as needed.",
    "Structural actions include:",
    "Exchange rate policy:",
    "Strengthening and better targeting of social assistance is essential.",
    "Social safety net spending will be increased by 0.6 percentage point of GDP, to 0.9 percent of GDP in 2008/2009.",
    "Authorities plan to put in place a comprehensive and effectively-targeted social safety net in close cooperation with the World Bank.",
    "The IMF's financial support is intended to signal improved macroeconomic prospects and help mobilize additional donor financial support to consolidate reserves and finance the expanded social safety net.",
    "The program allows for additional development spending if external assistance is higher than projected.",
    "Macroeconomic deterioration since mid-2007 driven by:",
    "Consequences observed:",
    "Authorities requested IMF financial assistance to restore macroeconomic stability while protecting the poor and vulnerable.",
    "Real GDP (change in percent):",
    "CPI (average):",
    "CPI (end year):",
    "Gross national saving (percent of GDP):",
    "Gross capital formation (percent of GDP):",
    "General government (percent of GDP) — selected rows:",
    "Money and credit (end-of-period, percent change):",
    "Interest rates (percent) — Six-month treasury bill rate (average, in percent):",
    "Balance of payments:",
    "Reserves (in millions of U.S. dollars) 2/:",
    "Exchange regime: Managed float",
    "Present rate (November 21, 2008): PRs 79.3 = US$ 1",
    "Real effective rate, CPI basis (annual average, 2000=100):",
    "Quota at the Fund: SDR 1,033.7 million",
    "[Pakistan and the IMF](http://www.imf.org/external/country/PAK/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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