Pak-IMF talks conclude, agreement for release of $518 million

DUBAI: Talks between Pakistan and the International Monetary Fund (IMF) concluded successfully on Thursday, with the IMF agreeing to release $518 million by end of March as the next tranche of the three-year $6.6bn Extended Fund Facility (EFF) programme.

“The mission and the Pakistani authorities have reached staff-level understandings on a Memorandum of Economic and Financial Policies on the sixth review of the program, which, upon approval by the IMF’s Management, will be discussed by the IMF Executive Board.

“Upon completion of the review, SDR 360 million (about US$518 million) would be made available to Pakistan,” said the outgoing chief of the IMF Mission to Pakistan Jeffery Franks.

Newly-announced Chief of IMF Mission to Pakistan, Herald Finger, will replace Franks after the talks.

At a jointly held press conference with the IMF staff in Dubai, Finance Minister Ishaq Dar reiterated that there would be no increase in gas and electricity prices.

Pakistan also informed the IMF of its expenditure of Rs. 150 billion on the implementation of the National Action Plan (NAP) as well as repatriation of Internally Displaced Persons (IDPs).

Also agreed upon was Rs.60 billion in tax cuts for Pakistan, while it was decided that the target for tax cuts should reach Rs. 2750 million by June.

Dar said that Pakistan’s foreign exchange reserves have increased to over $15 billion, entitling the country to receive subsidised loans.

However, due to the price reduction of petrol in the country, tax revenue decreased to Rs. 68 billion.

“Tax revenues were below the second-quarter indicative target by about 0.1 percent of GDP due in part to legal challenges to some revenue measures and to the fiscal effects of the plunge in international oil prices,” said a press statement from the IMF mission.

“While progress has been made in addressing the structural impediments to higher and more inclusive growth, important challenges remain, such as steps to enhance the independence of the SBP, permanently resolve energy sector deficiencies, complete the legal framework for deposit insurance, and privatize or restructure public enterprises,” noted the IMF.