Pakistan hopeful to get $450 mln from IMF after successful review

The International Monetary Fund (IMF) headquarters building is seen in Washington, DC on May 15, 2011. (AFP)

• IMF acknowledged Pakistan’s “considerable progress” as second review concludes
• Pakistan has so far secured $1.44 billion under the$6 bn loan program since July 2019

KARACHI: Pakistan finance ministry on Friday said that IMF was most likely to release the next $450 mln tranche after a successful second review of the $6 bn loan program.
“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,” Omar Hamid Khan, spokesman for the ministry of finance, tweeted after the conclusion of the second review.
The International Monetary Fund (IMF) on Friday noted that Pakistan had made considerable progress in the last few months in advancing reforms and had met all the end-December performance criteria.
An IMF mission arrived in Islamabad on Feb 3 for the second review of $6 billion bailout program, which Pakistan availed to stir its wobbling economy out of crisis.
A successful review will enable Pakistan to draw the third tranche of about $450 million in March 2020. Pakistan has so far secured $1.44 billion under the loan program since July 2019.
“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,” Ernesto Ramirez Rigo, IMF mission head said after conclusion of the second review of Extended Fund Facility (EFF).
“The mission and the authorities made significant progress in the discussions on policies and reforms. In the coming days, progress will continue to pave the way for the IMF Executive Board’s consideration of the review,” Rigo added.
The IMF mission chief said that 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,” Rigo said.
IMF said that the 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 mission head viewed.
Pakistan on Friday reported fiscal deficit at 2.3% of GDP in first half of current fiscal year 1HFY20 as compared to a fiscal deficit of 2.7% of GDP in 1HFY19, according to data issued by the Ministry of Finance.
The south Asian nation’s primary balance during 1HFY20 was reported at 0.7% of GDP as compared to last year’s -0.3% of GDP that remains within the target of 0.6% set by the IMF.
Economists say the IMF review conclusion is very encouraging for Pakistan and “any performance loophole may be plugged before the meeting of IMF executive board,” Muzamil Aslam, senior economist, told Arab News.
IMF’s Executive Board will review the findings of the mission and take the final decision in accordance with them.