Pakistan to get $ 550 million under EFF after approval from IMF Board: Dar

ISLAMABAD: Minister for Finance, Senator Muhammad Ishaq Dar on Saturday said that Pakistan and International Monetary Fund (IMF) have successfully concluded negotiations for grant of US$ 550 million 4th tranche for Extended Fund Facility (EFF) in Dubai and after the approval from IMF Board the country would get the amount by June 1, 2014.

This was stated by Finance Minster while addressing a joint press conference with IMF staff mission, led by Jeffrey Franks here at P Block Auditorium on Saturday.

Secretary Finance, Dr. Waqar Masood Khan, Governor Sytate Bank of Pakistan (SBP) Ashraf Wathra, Advisor Finance Ministry Rana Asad Amin, Chairman Federal Board of Revenue, Tariq Bajwa, Mansoor Dailimi Senior, Representative IMF and senior officials of the Ministry of Finance were also present on the occasion.

Ishaq Dar said that Pakistan would get an amount of US$ 2.20 billion from the Fund during this year while Pakistan would pay US$ 3 billion to IMF out of which US$ one billion would be returned from country’s own resources.

The mistier said that the IMF has appreciated the economic policies of the present government for its efforts in improving the economic imbalances committed during the previous regime.

He said that due to prudent economic policies of the government it has defeated the assumption and speculations regarding the economic collapse of the country by June 2014, while the international community is appreciating the policies of the government.

Ishaq Dar said that it the objective of the present government to increase Gross Domestic Product (GDP), contain inflation, reduce poverty, create job opportunities for the people and put the economy on strong footing.

Giving the over view of the national economy, he said that GDP growth was recorded at 4.1 percent during last 6 months as agri-sector posted 2 percent growth against 1.4 percent of same period of last year .

Dar said that industrial sector grew by 5.4 percent during the period under review as compared to 2.5 percent of same period last year adding that services sector posted 4.5 growth as compared to first six months of last year.

He said that the government in next three years has planed to increase GDP growth targets of 4 percent plus, 5 percent plus and 6 percent plus respectively.

The minister said that IMF earlier had projected 3.1 GDP percent but now it has revised it to 3.3 percent while “we are projecting it to 4 percent during the current financial year”.

Inflation during the last 10 months have register at 8.7 percent but IMF has projected the inflation at 10 percent in its second review whoever, it would further bring down to 9 percent, he added.

He hoped that by the end of the current financial year inflation would be further brought down to 8.8 percent.

The Minster said that during the review meeting, the Fund has recognized that inflation in Pakistan has come down, GDP growth has increased and both sides has consensus on State Bank monetary policy which is the major tool for controlling the inflation.

Dar said that on balance of payment side, IMF has said that net international reserves (NIR) of the country have over performed, while its capital advocacy is also going up.

He added that on banking sector, the Fund has also observed that non- performing loans have been decreased, while the fiscal deficit would remain below 6 percent by the closing of the current fiscal.

Revenue collection also posted 15 percent growth during last 10 months and reached at Rs.1745 billion as compared to Rs 1509 billion collected during same period of last year.

The minister said that government has provided Rs 232 billion subsidy for the life line users and vulnerable section of society using 200-300 units of electricity during the current fiscal year.

Ishaq Dar said that government was determined to add about 10,000 MW of electricity in the nation grid during next 4 years to overcome the energy shortages as well as to promote agriculture, industrial and social sector in the country.

The government was also working on the import of LNG adding that work on import of LNG would be completed by 2015 which would help in gas supply for industrial sector.

He said that the government has already launched converting of electricity generating plants at Jamsharo from furnace oil to coal while other Independent power Producers were also directed to convert thier units in cheap fuel to provide affordable electricity to consumers.

He said that special attention were also paid in oil and gas exploration sector as 43 new blocks were awarded adding that crud oil production has reached 92,000 barrel as compared to 72,000 barrel of last year.

The Finance Minister reiterated his commitment to build foreign exchange reserves to US $ 15 billion by September 31, 2014.

Ishaq Dar said that till May 9, 2014, the foreign exchange reserves has reached to about US $ 13 billion.

Speaking on the occasion, Jeffry Franks said that IMF mission held constructive discussions with government and central bank officials on the economic performance under the EFF programme and was encouraged by the overall progress made in pushing ahead with policies to strengthen macroeconomic stability and reviving investment and growth.

He added that 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, he added.

“Economic indicators are generally improving, with growth gaining momentum, external finance improving, and credit to the private sector rising.

However, core and headline inflation are also rising”, he remarked.

He said that led by large scale manufacturing and service sectors, GDP will expand by 3.3 percent in FY 2013/14, accelerating further to reach 4 percent next year.

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, he added.

“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.