ISLAMABAD: The policy level talks between Pakistan and the International Monetary Fund (IMF) will start from Wednesday and will continue for next three days for 7th Review under the $6.64 billion extended fund facility (EFF) program in Dubai. Policy level talks for the 6th Review were held in February in Dubai.
Pakistan entered into an extended fund facility (EFF) program with IMF on September 4, 2013. EFF Pakistan program is a 36 month extended arrangement under the Extended Fund Facility (EFF) for SDR 4.393 billion (US$6.64 billion, 425 percent of quota).
First tranche of SDR 360 million ($544.5 million, 34.8 percent of quota) became available on September 6 2013, and the remainder will be evenly phased thereafter subject to quarterly reviews.
The IMF had provided almost $3.2 billion to Pakistan under existing EFF arrangement but this money was largely used for paying back the previous loans obtained by Pakistan during the tenure of PPP government.
In the beginning of last month, the IMF set the budget 2015-16 outlook and Pakistan’s efforts for revenue generation as focal point of discussion forthcoming 7th review of Extended Funds Facility (EFF) program, besides the work done in the energy sector.
“The Finance Minister Ishaq Dar, who is currently in Baku, Azerbaijan for 48th Annual Meeting of the Asian Development Bank (ADB), will lead Pakistani delegation in the said talks” a well placed source at Finance Ministry told this scribe here on Saturday
Pakistani delegation comprises Secretary Finance Dr Waqar Masood, Governor State Bank of Pakistan (SBP) Ashraf Mahmood Wathra and Chairman FBR Tariq Bajwa and after the successful conduct of 7th review next tranche worth $550 million will be released with the approval of the IMF’s executive board by late June or early July
The objective of the meetings is to review progress achieved by Pakistan on economic reform agenda agreed in the extended fund facility (EFF) program with IMF on September 4, 2013. It is a 36-month extended arrangement under the Extended Fund Facility (EFF) for $ 6.64 billion.
First tranche of $ 544.5 million became available to Pakistan on September 6 2013, and the remainder will be evenly phased thereafter subject to quarterly reviews. An Extended Fund Facility with IMF provides assistance in support of comprehensive programs that include policies of the scope and character required to correct structural imbalances over an extended period.
In February this year, The International Monetary Fund (IMF) has conceded to Pakistan’s demand for downward revision of tax collection target by Rs119 billion after the government failed to introduce much-needed reforms, as both the sides announced an agreement for the next loan tranche of $518 million under the Extended Fund Facility (EFF) program without any special waivers.
It was not immediately clear whether the government will cut Public Sector Development Program by the same amount or the budget deficit ceiling of 4.9% of the GDP will be relaxed.
The resident Representative IMF, Tokhir Mirzoev, conveyed IMF’s stance to the Finance Minister Mohammad Ishaq Dar here in a meeting. Mirzoev has recently assumed responsibilities of his office in Pakistan. Both the leaders exchanged views on the current profile of Pakistan’s economy and the forthcoming 7th IMF review.
The Finance Minister said Pakistan had successfully conducted record six reviews with the IMF though in the past governments had not gone beyond two reviews. This had been possible due to the hectic reforms process that the government had religiously implemented, yielding positive results, the Finance Minister remarked. Dar also observed that IMF has agreed to reduce the FBR’s tax collection target to Rs2.691 trillion against the original target of Rs2.810 trillion.