IMF praises Pak’s performance on macroeconomic stability, growth and investment revival

WASHINGTON: The International Monetary Fund Saturday applauded Pakistan’s economic performance towards strengthening macroeconomic stability and reviving investment, while also saying that the growth is gaining momentum and external finance is also improving.

“Economic indicators are generally improving, with growth gaining momentum, external finance improving, and credit to the private sector rising,” the Fund said in a statement.

The statement came after the Fund’s staff mission, led by Jeffrey Franks, visited Dubai during May 1-9 to conduct discussions on the third review of Pakistan’s US $6.6 billion Extended Fund Facility (EFF), approved in September 2013.

The mission met with senior officials from the Ministry of Finance and the State Bank of Pakistan (SBP).

“The IMF mission held constructive discussions with government and central bank officials on the economic performance under the EFF program and is encouraged by the overall progress made in pushing ahead with policies to strengthen macroeconomic stability and reviving investment and growth,” Franks said.

The mission reached staff-level understandings with the authorities on a set of economic policies detailed in an updated Memorandum of Economic and Financial Policies.

The GDP will accelerate further from 3.3 percent to reach 4 percent next year, the Fund said.

“An improvement in the balance of payments situation along with the authorities’ efforts to build up reserves are yielding tangible gains in increasing SBP reserves and stabilizing sentiment in the foreign exchange market.”

“The authorities’ reform program remains broadly on track. They have met all end-March 2014 performance criteria with the exception of the target on Net Domestic Assets of the central bank, which was missed by a small margin.

The indicative target on social transfers to the poor under the Benazir Income Support Program (BISP) was also met.

The mission welcomed the government’s efforts to deepen its support to the poor through the BISP program, and the commitment to ensure timely payments to 4.7 million eligible families.

“The mission recognizes the authorities’ determination to pursue agreed structural reforms to enhance medium term growth prospects. Two of three structural benchmarks for this review were met, including the structural benchmark on tax administration and the benchmark on the audit of the National Electric Power Regulatory Authority (NEPRA).

“The mission supports the government’s ambitious privatization agenda and encourages stronger reform efforts in loss-making companies remaining in the public sector to improve resource allocation and limit poor performance”.

The Fund noted that the Pakistani authorities are also preparing trade policy and business climate reforms which will improve investment and economic growth.

The IMF staff will prepare a report on the third review that, upon management approval, is tentatively scheduled for consideration by the IMF Executive Board in late June. Upon approval, the conclusion of this review would make US$550 million available to Pakistan.