## IMF Survey : Pakistan Gets $6.6 Billion Loan from IMF

_IMF News, September 4, 2013_

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**Canonical URL:** [IMF Survey : Pakistan Gets $6.6 Billion Loan from IMF](https://www.imf.org/en/news/articles/2015/09/28/04/53/socar090413a)

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## Bibliographic details
- Published: September 4, 2013

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### Overview
- The IMF's Executive Board approved a $6.6 billion loan to Pakistan to support a program to stabilize the economy, boost growth, and expand the social safety net.
- Program duration: 36-month program under the IMF’s Extended Fund Facility.
- Rationale: Falling Central Bank foreign exchange reserves, widening fiscal deficit, relatively high inflation, structural impediments to growth, and limited access to international financial markets.

### Program objectives and scope
- Macroeconomic stabilization: bring down inflation, reduce the fiscal deficit, and reverse balance of payments pressures.
- Structural reforms: address bottlenecks in the energy sector, reform trade policy, the financial sector, and improve the business climate.
- Social protection: expand targeted income support and introduce a school-attendance conditional income support component for poor families.
- Complementary financing: World Bank, Asian Development Bank, and other partners offered significant financial support for adjustment and reform policies.

### Financing instrument and timeline
- Instrument: Extended Fund Facility (established in 1974 for countries with weak balance of payments and chronic structural impediments).
- Extended Fund Facility features: longer programs and longer maturities than Stand-By Arrangements—between 4½–10 years.
- Pakistan’s program duration: three years (36 months), allowing time to implement reforms; extended repayment period to ease future repayment.

### Key quantitative targets and indicators
- Loan amount: $6.6 billion.
- Current account deficit: around 1 percent of GDP.
- Foreign exchange reserves: falling to less than 1½ months of imports.
- Fiscal deficit path:
  - Nearly 8.5 percent of GDP last year.
  - Target: 5.8 percent of GDP in 2013/2014.
  - Target: 3.5 percent of GDP by the end of the program.
- Growth trajectory:
  - Recent average growth: 3 percent.
  - Anticipated growth by end of program: vicinity of 5 percent.
- Program length: 36-month program.

### Policy measures and mechanisms
- Fiscal measures:
  - Substantially reduce tax loopholes and exemptions.
  - Broaden the tax base and reduce tax evasion.
  - Tightening on the fiscal and monetary sides to put the fiscal position on a sustainable path and reduce inflation.
- Energy sector reforms:
  - Comprehensive energy policy addressing supply, distribution, regulation, and pricing.
  - Reduce energy subsidies that currently go mainly to the rich; maintain subsidies for the poorest consumers.
  - Aim to encourage efficient consumption, more reliable and consistent energy delivery, and substantially reduce blackouts over the program duration.
- Structural reforms:
  - Trade policy reform.
  - Financial sector reform to improve credit availability for private businesses.
  - Improve business climate and privatize some state-owned enterprises to increase economic efficiency.
- Social protection:
  - Significant boost of targeted income support programs: increase number of families covered and increase benefit amounts.
  - New conditional income support component for poor families tied to school attendance.

### Expected economic effects and mechanisms for job creation
- Short-term: growth may slip in the first year due to fiscal adjustment and time lags for structural reforms.
- Medium-term: restoring macroeconomic stability and addressing bottlenecks expected to accelerate growth toward the vicinity of 5 percent by the end of the program.
- Job creation channels:
  - Reduced fiscal deficit freeing up credit for private sector borrowing and investment.
  - Enhanced business environment and financial sector reforms attracting recovery of foreign direct investment.
  - Structural reforms and privatization increasing economic efficiency and growth potential.

*Source: IMF Survey, September 4, 2013.*

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## Content in this bundle

- [012813 (PDF)](/external/np/pp/eng/2013/012813.pdf){rel="external" type="application/pdf"}

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [Press release](http://www.imf.org/external/np/sec/pr/2013/pr13322.htm)
- [Extended Fund Facility](http://www.imf.org/external/np/exr/facts/eff.htm)
- [Middle East growth moderates](http://www.imf.org/external/pubs/ft/survey/so/2013/car052113a.htm)
- [Resident Representative](http://www.imf.org/external/country/PAK/rr/index.htm)
- [Pakistan and the IMF](http://www.imf.org/external/country/PAK/index.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar090413a_