ISLAMABAD: Finance Minister Ishaq Dar said the International Monetary Fund (IMF) would approve $502 million tranche of loan for Pakistan in December, though the country’s economic performance did not remain very impressive. The minister was talking after the representatives of Pakistan and the IMF concluded the 9th review under extended fund facility during the meetings that continued from October 26 to November 5.
“The 9th IMF’s review has been successfully concluded,” said Dar told a press conference along with IMF mission chief Harald Finger. He said that talks were supposed to end today (Friday) but they completed it on Thursday, as there was lot of misconception regarding these talks in media. The minister, of a government which was voted into power on the promise of breaking the begging bowl, said that Pakistan has completed ninth IMF review for the first time, as if success in getting loan was a great feat.
Dar said that executive board of the IMF would meet on December 14 or 15 to approve $502 million for Pakistan. Besides this, he said Pakistan would receive $900 million from World Bank and Asian Development Bank during ongoing month of November. The World Bank on November 12 would approve release of $500 million to Pakistan. Similarly, the ADB board will meet on November 20-21 to release $400 million for Pakistan, he said while giving details of the loans the country would receive from these two international lenders.
The minister said Pakistan had missed the revenue collection target by Rs40 billion and fiscal deficit by Rs23 billion during first quarter of the ongoing financial year. Similarly, the government had also missed the Net Domestic Assets target set by the IMF during July-September of the year 2015-2016. But the country had achieved the targets of Net International Reserves and government’s borrowing from the State Bank of Pakistan, he held. He further said power sector recoveries have been improved and line losses have reduced.
Dar said the government would pass the State Bank of Pakistan (amendment) act from the National Assembly today (Friday). Similarly, the National Assembly would also promulgate the ordinance for reducing withholding tax on banking transactions from 0.6 to 0.3 percent for the non-filers, he added. He said IMF has reduced the target of inflation from the previous 4.7 to 3.7 percent in view of falling trend witnessed in the first quarter of this financial year. The minister said as of 30th of the last month, Pakistan has foreign exchange reserves of 20.073 billion dollars. These include 15.25 billion dollars with the State Bank and 4.82 billion dollars with commercial banks.
Speaking on the occasion, IMF mission chief Harald Finger said that Pakistan’s GDP is expected to grow by about 4.5 percent in the ongoing financial year, helped by lower oil prices, planned improvement in the supply of energy and investment related to China Pakistan Economic Corridor (CPEC). He further said that inflation is expected to increase to 4.5 percent by the end of the current fiscal year due to a likely bottoming out of the effects of the low commodity prices.
“Gross international reserves reached $15.2 billion by end September 2015, up from $13.5 billion at end June 2015 and covering close to four months of prospective imports”. He said that Pakistan achieved the targets of SBP net international reserves, government borrowing from the SBP and foreign currency swap/forward position. However, the performance criteria on net domestic assets and the fiscal deficit were missed, as was the indicative target on tax revenue.
Harald Finger went on saying that mission welcomes the authorities plan to take the action to attain the budget deficit and tax revenues targets for the ongoing financial year and bring NDA in line with the programme targets. “In this context, reform efforts should continue to focus on strengthening public finances and external reserve buffers, and on accelerating steps to widen the tax net to create space for more infrastructure investment and social assistance,” he said.
“In addition, key priorities for growth include restructuring or privatising loss-making public enterprises, advancing the energy sector reforms, improving the business climate, promoting gender equality, and further expanding coverage under the Benazir Income Support Porgramme (BISP) to protect the most vulnerable,” Finger added.
