IMF releases $506m eighth tranche for Pakistan

ISLAMABAD: The International Monetary Fund (IMF) has approved the release of eighth tranche worth $506 million for Pakistan under $6.64 billion Extended Fund Facility (EFF) without any waiver amid the demand to fix energy and taxation problems.
It is the second approval of tranche by the IMF for which Islamabad did not seek any waiver, meeting conditions. With the approval of this tranche, Pakistan will enter into tough conditions of the IMF programme demanding Islamabad undertake structural reforms on energy and taxation fronts as well as implementing ambitious privatisation plan in more vigorous manner.
The IMF’s Executive Board, which met in Washington, DC, on Friday, approved a tranche of $506 million for Pakistan. Islamabad is expecting to receive this amount by early next week that will further jack up foreign currency reserves and meeting requirement of Net International Reserves (NIR) imposed by the IMF for June 30, 2015.
The foreign currency reserves stand at $18.2 billion and with the availability of $506 million, the reserves will go up to $18.7 billion against NIR requirement of above $19 billion for end June 2015.
The IMF had approved the three-year extended fund facility amounting to $6.6 billion in September 2013. With the approval of the seventh review, Pakistan had crossed the midpoint. So far, the focus of the IMF has remained on quantitative targets.
Pakistan had met all the conditions for the January-March period and, like the sixth review, it did not require any waiver from the executive board. However, in the first five reviews, the IMF gave 10 waivers to keep the bailout programme on track, as the government’s performance remained mixed in areas of reducing its budgetary borrowings from the central bank and building foreign currency reserves.
While placing emphasis on undertaking structural reforms, the IMF’s mission Chief said, “Important elements will include quick and decisive implementation of energy sector reforms, broadening the tax base, restructuring of state-owned enterprises, and improving the business climate.”