ISLAMABAD: The Finance Ministry is optimal optimism that Pakistan would successfully conduct 7th review of Extended Funds Facility (EFF) of the International Monetary Fund (IMF). However, it is unclear whether the government will cut Public Sector Development Program by the same amount or the budget deficit ceiling of 4.9 percent of the GDP will be relaxed.
“With the successful conduct of this review, Pakistan will be in a position to ensure the international financial institutions about the improvement in economic profile which will definitely pave way for flux of international investment in the country” a well placed source at Finance Ministry told this scribe here on Tuesday.
Thus the 7th review with full confidence as Pakistan had fulfilled all its obligations and now boasted of a stable economy. Pakistan’s economy was held in esteem by international rating agencies, and in fact Moody’s had already enhanced Pakistan’s economic outlook from stable to positive as well as Pakistan’s continued struggle for elimination of terrorism and said peace and security would ultimately benefit the economy.
In February this year, IMF conceded to Pakistan’s demand for downward revision of tax collection target by Rs 119 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.
An EFF 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. It has a comparatively longer repayment period of 4½–10 years, with repayments in twelve equal semi-annual installments.
Pakistan entered into an 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, 425 percent of quota). First tranche $544.5 million, 34.8 percent of quota) became available on September 6, 2013, and the remainder would be evenly phased thereafter subject to quarterly reviews.
The Finance Ministry is of the view that Pakistan successfully conducted record six reviews with the IMF though in the past governments could not go beyond two reviews and it became possible just because of the hectic reforms process that the government had religiously implemented, yielding positive results.
It is pertinent to note here that some two months back, Finance Minister Ishaq Dar and outgoing IMF Mission chief to Islamabad Jeffrey Franks announced successful conclusion of the sixth review of the economy, despite the government’s failure in introducing energy and taxation reforms and giving autonomy to the State Bank of Pakistan (SBP). Dar also observed that IMF has agreed to reduce the FBR’s tax collection target to Rs 2.691 trillion against the original target of Rs 2.810 trillion.
