{ "title": "IMF Staff and Pakistan Reach Staff-Level Agreement on the Pending Reviews Under the Extended Fund Facility", "publication": "IMF News, February 16, 2021", "sourceUrl": "https://www.imf.org/en/news/articles/2021/02/16/pr2141-pakistan-statement-by-imf-staff-on-pending-reviews", "canonical": "https://www.imf.org/en/news/articles/2021/02/16/pr2141-pakistan-statement-by-imf-staff-on-pending-reviews", "overlayPath": "/en/news/articles/2021/02/16/pr2141-pakistan-statement-by-imf-staff-on-pending-reviews/index.md", "summary": "IMF staff and the Pakistani authorities reached agreement on a package of measures to complete second to fifth reviews of the authorities’ reform program supported by the IMF Extended Fund Facility (EFF).", "publishDate": "2021-02-16", "sections": [ { "heading": "Overview of the staff-level agreement and financing", "content": "- IMF staff and the Pakistani authorities reached agreement on a package of measures to complete second to fifth reviews of the authorities’ reform program supported by the IMF Extended Fund Facility (EFF).\n- The EFF arrangement is for the amount of SDR 4,268 million (about US$6 billion).\n- Pending approval of the IMF’s Executive Board, the reviews’ completion would release around US$500 million.\n- The EFF arrangement duration referenced is a 39-month arrangement." }, { "heading": "Economic impact of COVID-19, recent performance, and outlook", "content": "- The COVID-19 shock temporarily disrupted Pakistan’s progress under the EFF-supported program.\n- Authorities shifted priorities to saving lives and supporting households and businesses, allowing higher-than-expected COVID-related social spending.\n- As a result of authorities’ actions, the COVID-19 first wave started to abate over the 2020 summer and the impact on the economy was significantly reduced.\n- The external current account improved due to stronger-than-expected remittances, import compression, and a mild export recovery.\n- High-frequency economic data pointed to a recovery.\n- The economy is projected to expand by 1.5 percent in FY2021 from the -0.4 percent in FY2020.\n- The outlook is subject to a high level of uncertainty and downside risks due to the unfolding COVID-19 second wave." }, { "heading": "Macroeconomic policy response and anchors", "content": "- Fiscal policy:\n - Fiscal strategy remains anchored by the sustainable primary deficit of the FY2021 budget.\n - The fiscal strategy allows for higher-than-expected COVID-related and social spending to minimize short-term impacts on growth and vulnerable populations.\n - Targets are supported by careful spending management and revenue measures, including reforms of corporate taxation intended to make it fairer and more transparent.\n - Power sector strategy aims at financial viability through management improvements, cost reductions, and adjustments in tariffs and subsidies calibrated to attenuate social and sectoral impacts.\n- Monetary and exchange rate policy:\n - The State Bank of Pakistan’s (SBP) monetary and exchange rate policies were critical in navigating the COVID-19 shock.\n - The SBP proceeded to a large easing of monetary policy and a sizeable expansion of refinancing facilities, enabled by improved reserve positions and a market-based exchange rate.\n - The banking system remains healthy; the SBP should remain vigilant to prevent possible financial stability stress as temporary support is phased out." }, { "heading": "External reserves and financing", "content": "- Reserve developments since the start of the program:\n - Gross reserves almost doubling to USD 13 billion until January 2021.\n - Net international reserves (NIR) increasing by over USD 9 billion until December 2020.\n- International reserves are set to improve further reflecting current account developments, the EFF resumption, and international partners’ support.\n- Emergency financing from the international community, including from the Fund’s Rapid Financing Instrument (RFI), supported the authorities’ COVID-19 response." }, { "heading": "Structural reforms, governance, and institutional actions", "content": "- Authorities are advancing multiple reforms to strengthen resilience and medium-term objectives:\n - Strengthening regulatory agencies’ legal frameworks (NEPRA and OGRA Acts).\n - Consolidating SBP’s autonomy (SBP Act).\n - Improving state owned enterprises (SOE) management (SOE Law).\n - Conducted a triage of SOEs and are moving forward with audits of contracts awarded for COVID-19 related spending.\n - Enhancing the effectiveness of the anti-money laundering/counter financing of terrorism (AML/CFT) framework and progressing in completing the action plan with the Financial Action Task Force (FATF)." }, { "heading": "Key statement by IMF mission chief", "content": "- IMF mission chief Ernesto Ramirez Rigo summarized:\n - Pre-COVID policies and reforms had started to reduce economic imbalances and set conditions for improved performance, with most program targets on track before the pandemic.\n - The pandemic required recalibration of the macroeconomic policy mix, the reforms calendar, and the EFF review schedule.\n - The agreed package balances supporting the economy, ensuring debt sustainability, and advancing structural reforms.\n - The IMF team thanked the Pakistani authorities for constructive and candid discussions.\n\nIMF Communications Department — Press Release No. 21/41, February 16, 2021\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/2021/02/16/pr2141-pakistan-statement-by-imf-staff-on-pending-reviews" } ], "bullets": [ "[Markdown version](/en/news/articles/2021/02/16/pr2141-pakistan-statement-by-imf-staff-on-pending-reviews/index.md)", "[Structured JSON version](/en/news/articles/2021/02/16/pr2141-pakistan-statement-by-imf-staff-on-pending-reviews/index.json)", "[Bundle manifest](/en/news/articles/2021/02/16/pr2141-pakistan-statement-by-imf-staff-on-pending-reviews/bundle-manifest.json)", "Published: February 16, 2021", "IMF staff and the Pakistani authorities reached agreement on a package of measures to complete second to fifth reviews of the authorities’ reform program supported by the IMF Extended Fund Facility (EFF).", "The EFF arrangement is for the amount of SDR 4,268 million (about US$6 billion).", "Pending approval of the IMF’s Executive Board, the reviews’ completion would release around US$500 million.", "The EFF arrangement duration referenced is a 39-month arrangement.", "The COVID-19 shock temporarily disrupted Pakistan’s progress under the EFF-supported program.", "Authorities shifted priorities to saving lives and supporting households and businesses, allowing higher-than-expected COVID-related social spending.", "As a result of authorities’ actions, the COVID-19 first wave started to abate over the 2020 summer and the impact on the economy was significantly reduced.", "The external current account improved due to stronger-than-expected remittances, import compression, and a mild export recovery.", "High-frequency economic data pointed to a recovery.", "The economy is projected to expand by 1.5 percent in FY2021 from the -0.4 percent in FY2020.", "The outlook is subject to a high level of uncertainty and downside risks due to the unfolding COVID-19 second wave.", "Fiscal policy:", "Monetary and exchange rate policy:", "Reserve developments since the start of the program:", "International reserves are set to improve further reflecting current account developments, the EFF resumption, and international partners’ support.", "Emergency financing from the international community, including from the Fund’s Rapid Financing Instrument (RFI), supported the authorities’ COVID-19 response.", "Authorities are advancing multiple reforms to strengthen resilience and medium-term objectives:", "IMF mission chief Ernesto Ramirez Rigo summarized:", "[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)" ], "alternates": { "markdown": "/en/news/articles/2021/02/16/pr2141-pakistan-statement-by-imf-staff-on-pending-reviews/index.md", "json": "/en/news/articles/2021/02/16/pr2141-pakistan-statement-by-imf-staff-on-pending-reviews/index.json", "bundleManifest": "/en/news/articles/2021/02/16/pr2141-pakistan-statement-by-imf-staff-on-pending-reviews/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T00:10:32.802Z" }