{
  "title": "IMF Executive Board Approves US$6 billion 39-Month EFF Arrangement for Pakistan",
  "publication": "IMF News, July 3, 2019",
  "sourceUrl": "https://www.imf.org/en/news/articles/2019/07/03/pr19264-pakistan-imf-executive-board-approves-39-month-eff-arrangement",
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  "summary": "On July 3, 2019, the Executive Board of the IMF approved an extended arrangement under for Pakistan to support the authorities' economic reform program. The program will help Pakistan to generate sustainable and balanced growth.",
  "publishDate": "2019-07-03",
  "sections": [
    {
      "heading": "Approval and financial terms",
      "content": "- On July 3, 2019, the Executive Board approved a 39-month extended arrangement under the Extended Fund Facility (EFF) for Pakistan for an amount of SDR 4,268 million (about US$6 billion or 210 percent of quota).\n- The Fund’s immediate disbursement: SDR716 million (or about US$1 billion).\n- Remaining amount to be phased over the duration of the program, subject to four quarterly reviews and four semi-annual reviews.\n- The approval is expected to unlock from Pakistan’s international partners around USD38 billion over the program period."
    },
    {
      "heading": "Program objectives and core policy measures",
      "content": "- Objective: support the authorities’ economic reform program to generate sustainable and balanced growth and reduce economic vulnerabilities.\n- Key elements:\n  - Decisive fiscal consolidation to reduce public debt and build resilience, starting with adoption of an ambitious FY 2020 budget.\n  - Revenue mobilization: increase revenue mobilization by 4 to 5 percent of GDP at the federal and the provincial level over the program period.\n  - Expand social spending and strengthen/broaden safety nets to protect the most vulnerable.\n  - Flexible, market-determined exchange rate to restore competitiveness, rebuild official reserves, and provide a buffer against external shocks.\n  - Appropriate monetary policy conducted by an independent central bank to shore up confidence and contain inflation; measures to strengthen State Bank of Pakistan autonomy and eliminate central bank financing of the budget deficit.\n  - Energy sector reforms to eliminate quasi-fiscal losses, depoliticize gas and power tariff setting, and over the program period gradually bring the sector to cost recovery.\n  - Structural reforms to strengthen institutions, increase governance and transparency, improve business climate, fight corruption, and enhance the AML/CFT framework.\n- Rationale: these measures aim to catalyze significant international financial support, restore macroeconomic stability, and promote strong and sustainable growth."
    },
    {
      "heading": "Policy guidance and priorities (as stated by IMF’s David Lipton)",
      "content": "- Fiscal: multi-year revenue mobilization strategy, broaden tax base, raise tax revenue in a well-balanced and equitable manner; strong commitment by provinces to support consolidation; effective public financial management to improve quality and efficiency of public spending.\n- Social protection: significant increase in resources allocated to key social assistance programs; supporting measures for the economic empowerment of women; investment in areas where poverty is high.\n- Monetary and exchange rate framework: flexible market-determined exchange rate and an adequately tight monetary policy; strengthen SBP autonomy and end central bank financing of the budget deficit.\n- Structural and institutional reforms: address energy sector weaknesses, improve governance of state-owned enterprises, improve business climate, strengthen anti-corruption and AML/CFT efforts to enable private investment and job creation."
    },
    {
      "heading": "Recent economic developments and outlook (overview)",
      "content": "- Pakistan’s economy faced legacy misaligned policies: large fiscal deficits, loose monetary policy, defense of an overvalued exchange rate; consequences included eroded macroeconomic buffers, increased external and public debt, depleted international reserves.\n- Structural weaknesses: weak tax administration, difficult business environment, inefficient and loss making SOEs, large informal economy.\n- Without urgent policy action, economic and financial stability could be at risk and growth prospects insufficient for a rapidly growing population.\n- The Fund-supported program is expected to coalesce broader support from multilateral and bilateral creditors in excess of US$38 billion."
    },
    {
      "heading": "Selected economic indicators (2014/15–2019/20)",
      "content": "- Population: 207.8 million (2016/17; provisional)\n- Per capita GDP: US$1,463 (2016/17)\n- Poverty rate: 29.5 percent (2012/13)\n- Main exports: Textiles ($12.8 billion, 2015/16)\n- Unemployment: 5.9 percent (2014/15)\n\nOutput and prices (Real GDP at factor cost; GDP deflator; Consumer prices)\n- Real GDP at factor cost:\n  - 2014/15: 4.1\n  - 2015/16: 4.6\n  - 2016/17: 5.2\n  - 2017/18: 5.5\n  - 2018/19 Est.: 3.3\n  - 2019/20 Proj.: 2.4\n- GDP deflator at factor cost:\n  - 2014/15: 4.3\n  - 2015/16: 0.4\n  - 2016/17: 4.0\n  - 2017/18: 7.5\n  - 2018/19: 11.8\n- Consumer prices (period average):\n  - 2014/15: 4.5\n  - 2015/16: 2.9\n  - 2016/17: 3.9\n  - 2017/18: 7.3\n  - 2018/19: 13.0\n- Consumer prices (end of period):\n  - 2014/15: 3.2\n  - 2015/16: 8.4\n\nExchange rate (Pakistani rupees per U.S. dollar)\n- Period average:\n  - 2016/17: -1.5\n  - 2017/18: 5.0\n- End of period:\n  - 2016/17: …\n  - 2017/18: 2.8\n  - 2018/19: 0.2\n  - 2019/20: 13.9\n\nSaving and investment (In percent of GDP)\n- Gross saving:\n  - 2014/15: 14.7\n  - 2015/16: 12.0\n  - 2016/17: 10.4\n  - 2017/18: 10.8\n  - 2018/19: 12.1\n- Government:\n  - 2014/15: -1.6\n  - 2015/16: -0.7\n  - 2016/17: -0.8\n  - 2017/18: -2.2\n  - 2018/19: -3.6\n  - 2019/20: -3.8\n- Nongovernment (including public sector enterprises):\n  - 2014/15: 16.3\n  - 2015/16: 14.6\n  - 2016/17: 12.8\n  - 2017/18: 12.6\n  - 2018/19: 14.5\n  - 2019/20: 15.9\n- Gross capital formation:\n  - 2014/15: 15.7\n  - 2015/16: 16.2\n  - 2016/17: 16.7\n  - 2017/18: 15.4\n  - 2018/19: 3.7\n  - 2019/20: 4.9\n\nPublic finances (In percent of GDP)\n- Revenue and grants:\n  - 2014/15: 15.5\n  - 2015/16: 15.2\n  - 2016/17: 15.0\n- Expenditure (including statistical discrepancy):\n  - 2014/15: 19.1\n  - 2015/16: 19.2\n  - 2016/17: 21.1\n  - 2017/18: 21.7\n  - 2018/19: 23.4\n- Budget balance (including grants):\n  - 2014/15: -5.3\n  - 2015/16: -4.4\n  - 2016/17: -5.8\n  - 2017/18: -6.4\n  - 2018/19: -6.8\n  - 2019/20: -7.1\n- Budget balance (excluding grants):\n  - 2014/15: -5.4\n  - 2015/16: -4.6\n  - 2016/17: -6.5\n  - 2017/18: -7.0\n  - 2018/19: -7.3\n- Primary balance (excluding grants):\n  - 2014/15: -0.3\n  - 2015/16: -1.8\n  - 2016/17: -0.6\n- General government debt incl. IMF obligations:\n  - 2014/15: 63.3\n  - 2015/16: 67.6\n  - 2016/17: 67.0\n  - 2017/18: 71.7\n  - 2018/19: 74.9\n  - 2019/20: 76.9\n- External general government debt:\n  - 2014/15: 18.9\n  - 2015/16: 20.8\n  - 2016/17: 20.5\n  - 2017/18: 24.3\n  - 2018/19: 26.5\n  - 2019/20: 32.0\n- Domestic general government debt:\n  - 2014/15: 44.4\n  - 2015/16: 46.8\n  - 2016/17: 46.5\n  - 2017/18: 47.4\n  - 2018/19: 48.4\n  - 2019/20: 44.9\n\nMonetary sector (Annual changes in percent of initial stock of broad money, unless otherwise indicated)\n- Net foreign assets:\n  - 2014/15: 2.2\n  - 2015/16: 1.7\n  - 2016/17: -3.2\n  - 2017/18: -5.6\n  - 2018/19: -6.3\n  - 2019/20: 8.9\n- Net domestic assets:\n  - 2014/15: 11.0\n  - 2015/16: 16.9\n  - 2016/17: 15.3\n  - 2017/18: 17.1\n- Broad money (percent change):\n  - 2014/15: 13.2\n  - 2015/16: 13.7\n  - 2016/17: 9.7\n- Reserve money (percent change):\n  - 2014/15: 9.9\n  - 2015/16: 22.5\n  - 2016/17: 12.7\n  - 2017/18: 13.5\n- Private credit (percent change):\n  - 2014/15: 5.9\n  - 2015/16: 11.1\n  - 2016/17: 16.6\n  - 2017/18: 14.9\n  - 2018/19: 13.3\n- Six-month treasury bill rate (period average, in percent):\n  - 2014/15: 8.8\n  - 2015/16: 6.3\n  - 2016/17: 6.0\n\nExternal sector\n- Merchandise exports, U.S. dollars (percentage change):\n  - 2014/15: -3.9\n  - 2015/16: -8.8\n  - 2016/17: 0.1\n  - 2017/18: 8.2\n- Merchandise imports, U.S. dollars (percentage change):\n  - 2014/15: -1.0\n  - 2015/16: 0.0\n  - 2016/17: 17.9\n  - 2017/18: -4.2\n  - 2018/19: -4.7\n- Current account balance (in percent of GDP):\n  - 2014/15: -1.7\n  - 2015/16: -4.1\n  - 2016/17: -2.6\n- Financial account (billions of U.S. dollars):\n  - 2014/15: 6.8\n  - 2015/16: 10.2\n  - 2016/17: 14.3\n  - 2017/18: 10.7\n  - 2018/19: 8.7\n\nExternal public and publicly guaranteed debt (In percent of exports of goods and services, unless otherwise indicated)\n- External public and publicly guaranteed debt:\n  - 2014/15: 159.8\n  - 2015/16: 193.3\n  - 2016/17: 209.4\n  - 2017/18: 218.3\n  - 2018/19: 225.2\n  - 2019/20: 234.0\n- Debt service:\n  - 2014/15: 20.7\n  - 2015/16: 22.2\n  - 2016/17: 30.1\n  - 2017/18: 26.3\n  - 2018/19: 37.9\n  - 2019/20: 45.7\n- Gross reserves (in millions of U.S. dollars) 3/:\n  - 2014/15: 13,534\n  - 2015/16: 18,143\n  - 2016/17: 16,141\n  - 2017/18: 9,789\n  - 2018/19: 6,824\n  - 2019/20: 11,187\n- Gross reserves (In months of next year's imports of goods and services):\n  - 2014/15: 1.9\n  - 2015/16: 1.4\n\nMemorandum items\n- Underlying fiscal balance (excl. grants; percent of GDP) 4/\n- General government and government guaranteed debt (incl. IMF; % GDP):\n  - 2014/15: 65.7\n  - 2015/16: 70.1\n  - 2016/17: 70.0\n  - 2017/18: 75.3\n  - 2018/19: 79.1\n  - 2019/20: 80.5\n- Net general government debt (incl. IMF; % GDP):\n  - 2014/15: 58.2\n  - 2015/16: 61.3\n  - 2016/17: 61.5\n  - 2017/18: 66.8\n  - 2018/19: 70.7\n  - 2019/20: 73.5\n- Real effective exchange rate (end of period percentage change):\n  - 2014/15: 6.5\n  - 2015/16: 2.1\n  - 2016/17: 3.4\n  - 2017/18: -11.2\n- Terms of trade (percentage change):\n  - 2014/15: -1.3\n  - 2015/16: -0.1\n- Real per capita GDP (percentage change):\n  - 2014/15: 2.0\n  - 2015/16: 2.6\n  - 2016/17: 3.6\n  - 2017/18: 0.5\n- GDP at market prices (in billions of Pakistani rupees):\n  - 2014/15: 27,443\n  - 2015/16: 29,076\n  - 2016/17: 31,922\n  - 2017/18: 34,619\n  - 2018/19: 38,559\n  - 2019/20: 44,446\n\nSource: IMF press release \"IMF Executive Board Approves US$6 billion 39-Month EFF Arrangement for Pakistan\" (Press Release No. 19/264).\n\n---\n\n Content in this bundle\n\n- Press release\n  - Press release (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Press release (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- David Lipton\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/2019/07/03/pr19264-pakistan-imf-executive-board-approves-39-month-eff-arrangement"
    }
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    "Published: July 3, 2019",
    "On July 3, 2019, the Executive Board approved a 39-month extended arrangement under the Extended Fund Facility (EFF) for Pakistan for an amount of SDR 4,268 million (about US$6 billion or 210 percent of quota).",
    "The Fund’s immediate disbursement: SDR716 million (or about US$1 billion).",
    "Remaining amount to be phased over the duration of the program, subject to four quarterly reviews and four semi-annual reviews.",
    "The approval is expected to unlock from Pakistan’s international partners around USD38 billion over the program period.",
    "Objective: support the authorities’ economic reform program to generate sustainable and balanced growth and reduce economic vulnerabilities.",
    "Key elements:",
    "Rationale: these measures aim to catalyze significant international financial support, restore macroeconomic stability, and promote strong and sustainable growth.",
    "Fiscal: multi-year revenue mobilization strategy, broaden tax base, raise tax revenue in a well-balanced and equitable manner; strong commitment by provinces to support consolidation; effective public financial management to improve quality and efficiency of public spending.",
    "Social protection: significant increase in resources allocated to key social assistance programs; supporting measures for the economic empowerment of women; investment in areas where poverty is high.",
    "Monetary and exchange rate framework: flexible market-determined exchange rate and an adequately tight monetary policy; strengthen SBP autonomy and end central bank financing of the budget deficit.",
    "Structural and institutional reforms: address energy sector weaknesses, improve governance of state-owned enterprises, improve business climate, strengthen anti-corruption and AML/CFT efforts to enable private investment and job creation.",
    "Pakistan’s economy faced legacy misaligned policies: large fiscal deficits, loose monetary policy, defense of an overvalued exchange rate; consequences included eroded macroeconomic buffers, increased external and public debt, depleted international reserves.",
    "Structural weaknesses: weak tax administration, difficult business environment, inefficient and loss making SOEs, large informal economy.",
    "Without urgent policy action, economic and financial stability could be at risk and growth prospects insufficient for a rapidly growing population.",
    "The Fund-supported program is expected to coalesce broader support from multilateral and bilateral creditors in excess of US$38 billion.",
    "Population: 207.8 million (2016/17; provisional)",
    "Per capita GDP: US$1,463 (2016/17)",
    "Poverty rate: 29.5 percent (2012/13)",
    "Main exports: Textiles ($12.8 billion, 2015/16)",
    "Unemployment: 5.9 percent (2014/15)",
    "Real GDP at factor cost:",
    "GDP deflator at factor cost:",
    "Consumer prices (period average):",
    "Consumer prices (end of period):",
    "Period average:",
    "End of period:",
    "Gross saving:",
    "Government:",
    "Nongovernment (including public sector enterprises):",
    "Gross capital formation:",
    "Revenue and grants:",
    "Expenditure (including statistical discrepancy):",
    "Budget balance (including grants):",
    "Budget balance (excluding grants):",
    "Primary balance (excluding grants):",
    "General government debt incl. IMF obligations:",
    "External general government debt:",
    "Domestic general government debt:",
    "Net foreign assets:",
    "Net domestic assets:",
    "Broad money (percent change):",
    "Reserve money (percent change):",
    "Private credit (percent change):",
    "Six-month treasury bill rate (period average, in percent):",
    "Merchandise exports, U.S. dollars (percentage change):",
    "Merchandise imports, U.S. dollars (percentage change):",
    "Current account balance (in percent of GDP):",
    "Financial account (billions of U.S. dollars):",
    "External public and publicly guaranteed debt:",
    "Debt service:",
    "Gross reserves (in millions of U.S. dollars) 3/:",
    "Gross reserves (In months of next year's imports of goods and services):",
    "Underlying fiscal balance (excl. grants; percent of GDP) 4/",
    "General government and government guaranteed debt (incl. IMF; % GDP):",
    "Net general government debt (incl. IMF; % GDP):",
    "Real effective exchange rate (end of period percentage change):",
    "Terms of trade (percentage change):",
    "Real per capita GDP (percentage change):",
    "GDP at market prices (in billions of Pakistani rupees):",
    "**Press release**",
    "[David Lipton](http://www.imf.org/external/np/omd/bios/dl.htm)",
    "[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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