Press Release: IMF Staff Concludes Review Mission to Pakistan

February 5, 2015

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

Press Release No. 15/35
February 5, 2015

An International Monetary Fund (IMF) staff mission, led by Jeffrey Franks, visited Dubai from January 26-February 5, 2014 to conduct discussions on the sixth review under Pakistan’s SDR 4.393 billion (about US$6.6 billion) Extended Fund Facility (EFF), approved by the IMF’s Executive Board on September 4, 2013 (Press Release No. 13/322). The mission met with Finance Minister Ishaq Dar, State Bank of Pakistan (SBP) Governor Ashraf Wathra, and other senior officials.

At the conclusion of the mission, Mr. Franks issued the following statement:

“The mission and the Pakistani authorities have reached staff-level understandings on a Memorandum of Economic and Financial Policies on the sixth review of the program, which, upon approval by the IMF’s Management, will be discussed by the IMF Executive Board. Upon completion of the review, SDR 360 million (about US$518 million) would be made available to Pakistan.

“Economic activity and the external position continue to improve, driven by prudent monetary and fiscal policies and helped by lower oil prices and robust remittances. Financial sector indicators remain sound. In fiscal year (FY) 2014/15, real GDP growth is expected to reach 4.3 percent with headline inflation remaining low. The external current account deficit will narrow to around 1.2 percent of GDP despite a decline in exports driven by lower cotton prices and real exchange rate appreciation. These developments, along with strong capital inflows and the recent Sukuk placement, have allowed further strengthening of the foreign exchange reserve buffers, which reached US$ 10.5 billion at end-December 2014.

“The authorities’ reform program remains on track. All end-December 2014 quantitative performance criteria were met, as well as the indicative target on transfers under the Benazir Income Support Program (BISP). The end-December structural benchmark for this review on submission of Anti-Money Laundering (AML) legislative amendments was also met.

“Fiscal performance has been generally good. The budget deficit for end-December was significantly below the program target. However, tax revenues were below the second-quarter indicative target by about 0.1 percent of GDP due in part to legal challenges to some revenue measures and to the fiscal effects of the plunge in international oil prices. Fund staff support the authorities’ efforts to address this shortfall with new revenue measures.

“The sharp drop in oil prices represents an historic opportunity to reduce the vulnerability of the economy by building stronger fiscal and external buffers, and to address some of the long-standing imbalances in the energy sector while still reducing consumer costs. We strongly support the authorities’ efforts in this regard. While progress has been made in addressing the structural impediments to higher and more inclusive growth, important challenges remain, such as steps to enhance the independence of the SBP, permanently resolve energy sector deficiencies, complete the legal framework for deposit insurance, and privatize or restructure public enterprises.

“The mission thanks the authorities and technical staff for their cooperation and reaffirms the IMF’s support to the government’s efforts to implement their economic reform program.”

IMF COMMUNICATIONS DEPARTMENT

Media Relations
E-mail: media@imf.org
Phone: 202-623-7100