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February 15, 2020

IMF says sound economic policies continue

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February 15, 2020

ISLAMABAD: The International Monetary Fund (IMF) mission has said that Pakistan had been successful in completing the "structural benchmarks" as well as in meeting "all end-December performance criteria" which had been set for the implementation of $6 billion Extended Fund Facility programme. 

In a press release issued on Friday after an IMF mission concluded its review of Pakistan's economic reforms, it said it had held "constructive and productive discussions with the Pakistani authorities".

The IMF stated that an International Monetary Fund (IMF) mission, led by Ernesto Ramirez Rigo, visited Islamabad during February 3-13, to initiate discussions on the second review of the authorities’ economic reform program supported under the Extended Fund Facility (EFF).

At the conclusion of the visit, Ramirez Rigo stated, “The IMF staff team had constructive and productive discussions with the Pakistani authorities and commended them on the considerable progress made during the last few months in advancing reforms and continuing with sound economic policies. The mission and the authorities made significant progress in the discussions on policies and reforms.

“The macroeconomic outlook remains broadly as expected at the time of the first review. Economic activity has stabilized and remains on the path of gradual recovery. The current account deficit has declined, helped by the real exchange rate that is now broadly in line with fundamentals, while international reserves continue to rebuild at a pace considerably faster than anticipated. Inflation should start to see a declining trend as the pass-through of exchange rate depreciation has been absorbed and supply-side constraints appear to be temporary. Fiscal performance in the first half of the fiscal year remained strong, with the general government registering a primary surplus of 0.7 percent of GDP on the back of strong domestic tax revenue growth. Development and social spending have been accelerated.”

The IMF stated that “in the coming days, progress will continue to pave the way for the IMF Executive Board’s consideration of the review."

Meanwhile, Special Secretary to Finance Ministry and official Spokesman Omar Hamid Khan on Friday tweeted that the talks were concluded with complete understanding on all issues and progress in all areas was noted. The IMF Board in all likelihood will approve the recommendations of the review team, he concluded.

SDPI chief Dr Abid Qayyum Suleri, when contacted, said “In my opinion, the IMF wanted to meet with new head of FBR to listen to his/her strategy for revenue generation. As we have not got anyone in place yet, so most probably they will have an audio/video meeting with the next head of revenue managers before the board meeting.”

On energy tariffs, he said, "We may freeze them for a while until prices of wheat and sugar come under control, but eventually energy payment charges will have to be passed on to consumers." He added that the prime minister may like to increase the threshold of lifeline consumers from 300 units to say 400 but rest of the consumers will have to pay to curtail the energy circular debt.

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