IMF approves $555.9m tranche for Pakistan

ISLAMABAD: At a time when political temperature is rising, the IMF executive board in its meeting in Washington DC on Friday approved the fourth tranche of $555.9 million for Pakistan.

“It is the success of our economic policies that international financial institutions are reposing confidence in Pakistan,” Federal Minister for Finance Ishaq Dar said in his brief statement issued here on Friday after approval of the IMF tranche.

“Just a while ago, the IMF’s Board completed the third review and approved the fourth tranche for Pakistan,” a senior official of Finance Division confirmed to The News prior to the statement of finance minister.

After the approval of this tranche under $6.67 billion Extended Fund Facility (EFF), Pakistan’s foreign currency reserves will get close to $15 billion by end June 2014. The foreign currency reserves have already touched $14 billion and with the inflow of $555.9 million it will touch $14.5 billion.

However, in another development, the IMF staff led by Jeffry Franks has postponed the next review of Pakistan’s economy till end July or early August 2014. It was earlier scheduled at Istanbul (Turkey) from mid of next month.

The IMF staff, the sources said, has been asking the government to resolve the lingering controversy over Nepra’s decision to reduce the line losses for Discos (power distribution companies) from 16.5 percent to 12.82 percent as well as steps to avoid delays in privatisation proceeds.

When asked, the IMF high-ups told this correspondent in background discussions that Nepra’s decision to reduce the limit of losses from 16.5 percent to 12 percent would create distortions in the budget so the Fund was asking the government to resolve this issue amicably and then hold the next review talks with the IMF staff.

By reducing the limit of losses, there will be increased demand for subsidies in case the government does not enhance the electricity tariff. On the privatisation front, the official sources said that the government has successfully offloaded shares of United Bank Limited to fetch $387 million and now the process was under way to sell the shares of PPL.

On the hiring of financial advisor for the state-owned PIA, the process is underway and is expected to be completed soon. 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).However, the benchmark on hiring privatisation advisers was only partially met. In the energy sector, the Fund mission urged the authorities to continue implementation in the days ahead.