IMF approves $452m second tranche to Pakistan

ISLAMABAD: The Executive Board of the International Monetary Fund (IMF) has completed the first review of Pakistan’s economic performance and approved $452 million second tranche under the Extended Fund Facility (EFF).

The completion of the review will allow the authorities to draw SDR 328 million (about $452.4 million), bringing total disbursements to SDR 1,044 million (about $1,440 million). The Executive Board approved the 39-month, SDR 4,268 million (about $6 billion at the time of approval of the arrangement, or 210 percent of quota) EFF for Pakistan on July 3, 2019.

Following the Executive Board’s decision, David Lipton, First Deputy Managing Director and Acting Chair, issued the following statement:

“Pakistan’s programme is on track and has started to bear fruit. However, risks remain elevated. Strong ownership and steadfast reform implementation are critical to entrench macroeconomic stability and support robust and balanced growth.

“The authorities are committed to sustaining the progress on fiscal adjustment to place debt on a downward path. The planned reforms include strengthening tax revenue mobilisation, including the elimination of tax exemptions and loopholes, and prudent expenditure policies. Preparations for a comprehensive tax policy reform should start early to ensure timely implementation. Enhanced social safety nets will help alleviate social costs and build support for reforms.

“The flexible, market-determined exchange rate remains essential to cushion the economy against external shocks and rebuild reserve buffers. The current monetary stance is appropriately tight and should only be eased once disinflation is firmly entrenched. Strengthening the State Bank of Pakistan’s autonomy and governance will support these efforts.