{
  "title": "Press Release: IMF Executive Board Approves 3-Year, US$6.64 Billion Extended Arrangement for Pakistan",
  "publication": "IMF News, September 4, 2013",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr13322",
  "canonical": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr13322",
  "overlayPath": "/en/news/articles/2015/09/14/01/49/pr13322/index.md",
  "summary": "Executive Board approved a 3-year arrangement under the Extended Fund Facility (EFF) for Pakistan equivalent to SDR 4.393 billion (US$6.64 billion, or 425 percent of Pakistan’s quota).",
  "publishDate": "2013-09-04",
  "sections": [
    {
      "heading": "IMF approval and financing terms",
      "content": "- Executive Board approved a 3-year arrangement under the Extended Fund Facility (EFF) for Pakistan equivalent to SDR 4.393 billion (US$6.64 billion, or 425 percent of Pakistan’s quota).\n- Initial disbursement: SDR 360 million (about US$544.5 million).\n- Remaining amount to be evenly disbursed over the duration of the program, subject to completion of quarterly reviews."
    },
    {
      "heading": "Purpose and expected macroeconomic impact",
      "content": "- Program goals:\n  - Support the country’s economic reform program to promote inclusive growth.\n  - Help the economy rebound, forestall a balance of payments crisis, and rebuild reserves.\n  - Reduce the fiscal deficit and undertake comprehensive structural reforms to boost investment and growth.\n  - Catalyze mobilization of resources from other donors, contingent on adherence to the program."
    },
    {
      "heading": "Key messages from Ms. Nemat Shafik, Deputy Managing Director and Acting Chair",
      "content": "- Pakistan faces serious economic challenges: high overall vulnerabilities and crisis risks, subpar growth, and unsustainable fiscal and balance of payments positions.\n- Fiscal policy:\n  - 2013/14 federal budget is an important initial step toward fiscal consolidation.\n  - Important to raise the tax-to-GDP ratio, including by broadening the tax base through reduction in exemptions and concessions and extending taxation to areas not fully covered by the tax net.\n  - An overhaul of tax administration is required; provinces should contribute fully to the adjustment effort.\n- Monetary and exchange rate policy:\n  - Should be geared to rebuilding external buffers.\n  - Direct lending to the government should cease.\n  - Efforts to improve independence of monetary policy need to be stepped up to pave the way for improved price stability.\n- Financial sector:\n  - Risks to the banking sector are manageable, but undercapitalization of vulnerable banks needs to be addressed.\n- Structural reforms for sustained inclusive growth:\n  - Energy policy to address long-standing sector problems.\n  - Liberalize trade regime.\n  - Restructure or privatize public sector enterprises.\n  - Improve the business climate.\n- Social protection:\n  - Protecting the most vulnerable from direct and indirect impacts of fiscal consolidation and price adjustments is a priority.\n  - Coverage and benefits of these programs should be expanded as savings from tariff adjustments and fiscal space are realized."
    },
    {
      "heading": "Annex — Recent developments",
      "content": "- Growth constraints: internal security, macroeconomic imbalances, structural energy sector problems, power outages averaging about 8-10 hours a day, floods, and difficult security situation.\n- GDP growth averaged 3 percent over the past five years.\n- Private domestic investment declined from 14 percent of GDP in 2007/08 to around 11 percent of GDP in 2012/13.\n- Central bank reserves declined by some 45 percent in the past year; as of end June 2013, reserves stood at US$6 billion.\n- Need to boost confidence to attract foreign direct investment."
    },
    {
      "heading": "Program summary and near-term measures",
      "content": "- Authorities have implemented key measures for a strong start:\n  - Fiscal consolidation measures totaling 2 percent of GDP.\n  - Adjusting electricity tariffs as part of a new comprehensive energy policy.\n  - Reorienting monetary policy to rebuild foreign exchange reserves and reduce inflation.\n  - Launching a decisive tax enforcement program.\n- Expected outcomes of initial measures:\n  - Reduce the government budget deficit to sustainable levels.\n  - Reduce crowding-out of private investment.\n  - Contain inflation over the medium term."
    },
    {
      "heading": "Medium-term program elements and targets",
      "content": "- Raise growth gradually to near 5 percent by 2015/16 as macroeconomic stability is entrenched and structural reforms are pursued.\n- Bring inflation down to 6-7 percent range by 2015/16, from the current level of 8.3 percent.\n- Increase central bank reserves to over 3 ½ months of imports by 2015/16.\n- Reduce the fiscal deficit to 3 ½ percent of GDP by 2015/16 from an estimated 8.0 percent in 2012/13, with provincial governments contributing their fair share.\n- Liberalize the trade regime and reform public sector enterprises through restructuring and/or privatization.\n- Improve the business climate.\n- Strengthen the tax system.\n- Protect the most vulnerable from the direct and indirect impacts of reform measures."
    },
    {
      "heading": "Pakistan: Selected economic indicators and projections (highlights)",
      "content": "- Population: 178.9 million (2011/12)\n- Per capita GDP: US$1,228 (2011/12)\n- Poverty rate: 17.2 percent (2007/08)\n- Main exports: Textiles ($9.9 billion)\n\n- Output and prices (Annual percentage change)\n  - Real GDP at factor cost: 2009/10: 2.6; 2010/11: 3.7; 2011/12: 4.4; 2012/13: 3.6; 2013/14 Baseline: 3.3; Program: 2.5\n  - GDP deflator at factor cost: 2009/10: 10.7; 2010/11: 19.5; 2011/12: 5.3; 2012/13: 7.5; 2013/14: 7.9\n  - Consumer prices (period average) 2/: 2009/10: 10.1; 2010/11: 13.7; 2011/12: 11.0; 2012/13: 7.4; 2013/14 Baseline: 8.2; Program: 8.3\n  - Consumer prices (end of period) 2/: 2009/10: 11.8; 2010/11: 13.3; 2011/12: 11.3; 2012/13: 5.9; 2013/14 Baseline: 10.5; Program: 10.0\n  - Pakistani rupees per U.S. dollar (period average): 2009/10: 7.6; 2010/11: 2.2; 2011/12: 4.1; 2012/13: 8.7; 2013/14: …\n\n- Saving and investment (In percent of GDP)\n  - Gross saving: 2009/10: 13.6; 2010/11: 14.2; 2011/12: 12.9; 2012/13: 12.5; 2013/14: 14.3\n  - Government (saving): 2009/10: -2.4; 2010/11: -4.2; 2011/12: -5.1; 2012/13: -5.2; 2013/14 Baseline: -4.5; Program: -2.2\n  - Nongovernment (including public sector enterprises): 2009/10: 16.0; 2010/11: 18.4; 2011/12: 17.9; 2012/13: 16.9; 2013/14: 16.5\n  - Gross capital formation 3/: 2009/10: 15.8; 2010/11: 14.1; 2011/12: 14.9; 2012/13: 13.5; 2013/14 Baseline: 12.3; Program: 11.6\n\n- Public finances (In percent of GDP)\n  - Revenue and grants: 2009/10: 12.6; 2010/11: 13.1; 2011/12: 13.0; 2012/13: 14.4\n  - Expenditure (including statistical discrepancy): 2009/10: 20.2; 2010/11: 21.5; 2011/12: 21.0; 2012/13: 20.8; 2013/14: 19.9\n  - Budget balance (including grants): 2009/10: -5.9; 2010/11: -6.9; 2011/12: -8.4; 2012/13: -7.9; 2013/14 Baseline: -7.8; Program: -5.5\n  - Budget balance (excluding grants): 2009/10: -6.2; 2010/11: -7.1; 2011/12: -8.8; 2012/13: -8.0; 2013/14 Baseline: -8.1; Program: -5.8\n  - Primary balance: 2009/10: -1.6; 2010/11: -2.9; 2011/12: -4.0; 2012/13: -3.6; 2013/14 Baseline: -3.0; Program: -0.9\n  - Total general government debt 4/: 2009/10: 61.5; 2010/11: 59.5; 2011/12: 63.8; 2012/13: 66.6; 2013/14 Baseline: 69.2\n  - External general government debt: 2009/10: 30.2; 2010/11: 26.6; 2011/12: 25.8; 2012/13: 24.1; 2013/14: 23.2\n  - Domestic general government debt: 2009/10: 31.3; 2010/11: 32.9; 2011/12: 38.0; 2012/13: 42.5; 2013/14: 46.1\n\n- Monetary sector (Annual changes in percent of initial stock of broad money, unless otherwise indicated)\n  - Net foreign assets: 2009/10: 0.5; 2010/11: -3.8; 2011/12: -3.4; 2012/13: -0.7; 2013/14: 3.9\n  - Net domestic assets: 2009/10: 11.9; 2010/11: 19.3; 2011/12: 12.2\n  - Broad money (percent change): 2009/10: 15.9; 2010/11: 17.7; 2011/12: 13.8\n  - Reserve money (percent change): 2009/10: 11.4; 2010/11: 17.1; 2011/12: 13.4\n  - Private credit (percent change): 2009/10: 4.0; 2010/11: -0.6; 2011/12: 8.0; 2012/13: 8.5\n\n- External sector\n  - Merchandise exports, U.S. dollars (percentage change): 2009/10: 2.9; 2010/11: 28.9; 2011/12: -2.6; 2012/13: 0.2; 2013/14: 9.6\n  - Merchandise imports, U.S. dollars (percentage change): 2009/10: -1.7; 2010/11: 12.8; 2011/12: 7.3; 2012/13: 6.9\n  - Current account balance (in percent of GDP): 2009/10: 0.1; 2010/11: -2.1; 2011/12: -1.0\n\n- External public and publicly guaranteed debt (In percent of exports of goods and services, unless otherwise indicated)\n  - 2009/10: 178.5; 2010/11: 153.4; 2011/12: 160.3; 2012/13: 157.3; 2013/14 Baseline: 147.8; Program: 143.7\n  - Debt service: 2009/10: 20.6; 2010/11: 22.5; 2011/12: 19.4\n  - Gross reserves (in millions of U.S. dollars) 5/: 2009/10: 12,958; 2010/11: 14,784; 2011/12: 10,799; 2012/13: 6,008; 2013/14 Baseline: 2,283; Program: 9,566\n  - In months of next year's imports of goods and services: 2009/10: 2.7; 2010/11: 1.4\n\n- Memorandum items:\n  - Real effective exchange rate (annual average, percentage change): 2009/10: 0.9; 2010/11: 6.1; 2011/12: -4.8; 2012/13: -7.7\n  - Terms of trade (percentage change): 2009/10: 1.8; 2010/11: 7.0; 2011/12: -9.6; 2012/13: -0.4; 2013/14 Baseline: 1.0; Program: -0.1\n  - Real per capita GDP (percentage change): 2009/10: 1.5; 2010/11: 2.3; 2011/12: 1.3\n  - GDP at market prices (in billions of Pakistani rupees): 2009/10: 14,867; 2010/11: 18,285; 2011/12: 20,091; 2012/13: 22,909; 2013/14 Baseline: 25,415; Program: 25,351\n  - GDP at market prices (in billions of U.S. dollars): 2009/10: 177.6; 2010/11: 213.7; 2011/12: 225.6; 2012/13: 236.5; 2013/14 Baseline: 235.6; Program: 229.9\n\n- Notes:\n  - Fiscal year ends June 30.\n  - Inflation after 2009/10 based on new CPI weights, recalculated in September 2011.\n  - Including changes in inventories. Investment data recorded by the Pakistan Bureau of Statistics are said to underreport true activity.\n  - Excludes military debt, and commercial loans.\n  - Gross reserves excluding gold and foreign currency deposits of commercial banks held with the State Bank of Pakistan.\n  - Please note changes in US Dollar amounts adjusted to today’s exchange rate.\n\nIMF Communications Department — Press Release No. 13/322, September 4, 2013\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/pr13322"
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    "Published: September 4, 2013",
    "Executive Board approved a 3-year arrangement under the Extended Fund Facility (EFF) for Pakistan equivalent to SDR 4.393 billion (US$6.64 billion, or 425 percent of Pakistan’s quota).",
    "Initial disbursement: SDR 360 million (about US$544.5 million).",
    "Remaining amount to be evenly disbursed over the duration of the program, subject to completion of quarterly reviews.",
    "Program goals:",
    "Pakistan faces serious economic challenges: high overall vulnerabilities and crisis risks, subpar growth, and unsustainable fiscal and balance of payments positions.",
    "Fiscal policy:",
    "Monetary and exchange rate policy:",
    "Financial sector:",
    "Structural reforms for sustained inclusive growth:",
    "Social protection:",
    "Growth constraints: internal security, macroeconomic imbalances, structural energy sector problems, power outages averaging about 8-10 hours a day, floods, and difficult security situation.",
    "GDP growth averaged 3 percent over the past five years.",
    "Private domestic investment declined from 14 percent of GDP in 2007/08 to around 11 percent of GDP in 2012/13.",
    "Central bank reserves declined by some 45 percent in the past year; as of end June 2013, reserves stood at US$6 billion.",
    "Need to boost confidence to attract foreign direct investment.",
    "Authorities have implemented key measures for a strong start:",
    "Expected outcomes of initial measures:",
    "Raise growth gradually to near 5 percent by 2015/16 as macroeconomic stability is entrenched and structural reforms are pursued.",
    "Bring inflation down to 6-7 percent range by 2015/16, from the current level of 8.3 percent.",
    "Increase central bank reserves to over 3 ½ months of imports by 2015/16.",
    "Reduce the fiscal deficit to 3 ½ percent of GDP by 2015/16 from an estimated 8.0 percent in 2012/13, with provincial governments contributing their fair share.",
    "Liberalize the trade regime and reform public sector enterprises through restructuring and/or privatization.",
    "Improve the business climate.",
    "Strengthen the tax system.",
    "Protect the most vulnerable from the direct and indirect impacts of reform measures.",
    "Population: 178.9 million (2011/12)",
    "Per capita GDP: US$1,228 (2011/12)",
    "Poverty rate: 17.2 percent (2007/08)",
    "Main exports: Textiles ($9.9 billion)",
    "Output and prices (Annual percentage change)",
    "Saving and investment (In percent of GDP)",
    "Public finances (In percent of GDP)",
    "Monetary sector (Annual changes in percent of initial stock of broad money, unless otherwise indicated)",
    "External sector",
    "External public and publicly guaranteed debt (In percent of exports of goods and services, unless otherwise indicated)",
    "Memorandum items:",
    "Notes:",
    "[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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