Press Release No. 16/137

Press Release: IMF Executive Board Completes Tenth Review Under the Extended Fund Facility for Pakistan

March 25, 2016

The Executive Board of the International Monetary Fund (IMF) on March 25, 2016 completed the tenth review of Pakistan’s economic performance under a three-year program supported by an Extended Fund Facility (EFF) arrangement. In completing the review, the Executive Board also approved the authorities’ request for modification of the end-March 2016 performance criterion on the State Bank of Pakistan’s stock of net foreign currency swaps/forward position. The Executive Board’s decision enables the immediate disbursement of an amount equivalent to SDR 360 million (about US$502.6 million), bringing total disbursements to SDR 3.96 billion (US$5.53 billion).

On September 4, 2013, the Executive Board approved the 36-month extended arrangement under the EFF in the amount of SDR 4.393 billion (US$6.64 billion at the time of approval of the arrangement) or 216 percent of Pakistan’s current quota at the IMF. (See Press release No. 13/322).

Following the Executive Board’s discussion of Pakistan, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair issued the following statement:

“Economic activity has continued to gradually gain strength, and short-term vulnerabilities have receded. Building on these gains, further progress, including in the area of structural reforms, is needed to generate strong and inclusive growth and make the economy more resilient and competitive.

“The authorities’ continued commitment to reach the program’s fiscal targets is welcome. Further widening the tax net and ensuring the fairness of the tax system, together with prudent management of budgetary spending and close coordination with the provinces, remain important to consolidate the gains in addressing Pakistan’s fiscal vulnerabilities while generating the necessary resources for higher priority spending in areas such as infrastructure, health, and education.

“The monetary policy stance remains appropriate. Falling oil prices have helped efforts to bolster foreign reserves. While the establishment of an independent monetary policy committee has been an important step in advancing central bank autonomy, addressing remaining recommendations of the 2013 Safeguards Assessment will be key to strengthen it further.

“Reinforcing financial sector resilience remains pertinent and efforts to enhance capital buffers of banks are encouraging. The recent amendments to the AML Act constitute a first step to widen the application of AML tools to the proceeds of tax crimes. Further efforts to strengthen the AML/CFT framework are welcome and will help strengthen financial stability and tax compliance.

“Amid recent setbacks to the agenda to restructure or privatize loss-making public sector enterprises, continued resolve to complete the planned reforms remains important to address fiscal risks and strengthen economic efficiency. The authorities’ focus on containing losses in affected companies is also welcome in this regard. Further improving the business climate, transparency, and governance should help generate high and more inclusive growth.”