KARACHI: International Monetary Fund (IMF) posed trust over the progress of economic reforms in Pakistan needed for the $6 billion loan program to go forward, suggesting release of the second tranche to the country anytime after coming Thursday.
IMF spokesman Gerry Rice said the fund’s board would meet on Thursday (19th December) to discuss the first quarterly review conducted in November by the staff for preliminary assessment.
“What that indicates is that all prior actions and performance criteria under the program with Pakistan have been met,” Rice told late on Thursday a regular news briefing available online. “And that the financing assurances needed for the program to go forward are in place.”
Pakistan agreed to an IMF’s loan program of Pakistan in April after the south Asian economy went in hot water on worsening balance of payment position. The country bagged the first tranche of $991.4 million under the $6 billion extended fund facility in July.
The country is scheduled to secure $6 billion in three years till 2021-22 from the IMF and meanwhile it has to repay approximately over $$4 billion to the Fund in four years till 2022/23.
Since the program’s continuity is linked with quarterly review, the IMF’s mission visited Islamabad from October 28 to November 8, 2019 to conduct discussions on the first review under the extended fund facility.
“We had a mission there in November and the communication around that with a preliminary assessment of where we think Pakistan stands,” Rice said. “Which is that the program is on track and we reached a staff-level agreement on what we call the first review.”
The successful completion of the review would lead to disbursement of around $450 million as the next tranche of the IMF loan and “will help unlock significant funding from bilateral and multilateral partners”.
The IMF said the government’s policies have started to bear fruit, “helping to reverse the buildup of vulnerabilities and restore economic stability”.
“The external and fiscal deficits are narrowing, inflation is expected to decline, and growth, although slow, remains positive,” it said at the conclusion of the last month meeting. “Sustaining sound policies and advancing structural reforms remain key priorities to enhance resilience and pave the way for stronger and sustainable growth.”
As expected, the fund’s nod to structural changes thawed frozen relationship with international financial institutions. Notably, Asian Development Bank restored its policy-based lending to Pakistan, having committed over $2 billion in loans this fiscal year to bolster the country’s external account sector and plug leakages in cash-bleeding energy sector.