The Executive Board of the International Monetary Fund (IMF) on June 27, 2016 completed the eleventh review of Pakistan’s economic performance under a three-year program supported by an Extended Fund Facility (EFF) arrangement. The Executive Board’s decision enables the immediate disbursement of an amount equivalent to SDR 360 million (about US$501 million), bringing total disbursements to SDR 4.32 billion (about US$6.01 billion).

On September 4, 2013, the Executive Board approved the 36-month extended arrangement under the EFF in the amount of SDR 4.393 billion (about US$6.64 billion at the time of approval of the arrangement) or 216 percent of Pakistan’s current quota at the IMF. See Press Release No. 13/322).

Following the Executive Board’s discussion of Pakistan, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair issued the following statement:

“The economic recovery has gradually strengthened and short-term vulnerabilities have further receded on the back of improved macroeconomic stability and progress on structural reforms. Preserving and consolidating macroeconomic stability and further advances with key structural reforms, including beyond the program’s horizon, are needed to foster stronger and more inclusive growth.

“The authorities are on track to achieve their program’s end-year fiscal targets, and their commitment to continue with gradual fiscal consolidation in FY2016/17 is welcome. The amendments to the Fiscal Responsibility and Debt Limitation Act will strengthen the anchor for medium-term fiscal policy, supporting fiscal sustainability and medium-term macroeconomic stability. Furthermore, the new framework for Public-Private Partnerships will foster much needed growth-supporting investments and help manage associated fiscal risks. Sustaining progress with tax administration reforms, with a view to widening the tax base, is needed to increase tax revenues and create needed fiscal space for priority infrastructure and to reinforce social expenditures.

“Foreign exchange reserves have been progressively rebuilt under the program, and the continued accumulation of international reserves will further bolster external buffers and reduce vulnerabilities. Maintaining a prudent monetary policy stance is needed to preserve the achievements in containing inflation and to support macroeconomic stability. Progress in strengthening the SBP’s autonomy is welcome, and addressing the remaining recommendations of the 2013 IMF Safeguards Assessment will be important to strengthen it further.

“Advancing financial sector reforms is important to reinforce financial sector stability and development. Important steps include moving ahead with establishing a deposit insurance scheme and strengthening the regulatory and supervisory framework. The expansion of the coverage of tax crimes under the AML framework is welcome and will contribute to improve tax compliance and governance.

“Continued progress with structural reforms is needed to raise Pakistan’s growth potential. Restructuring and privatizing loss-making public sector enterprises (PSEs) remain a priority to ensure their financial viability, reduce fiscal costs and strengthen the efficiency of the economy. In light of the delays in the privatization agenda earlier in the year, the authorities’ commitment to attract private sector participation, while putting in place measures to reduce PSEs’ financial losses, is welcome. Furthermore, efforts to complete the energy sector reform should remain a priority. The authorities’ decision to further contain the accumulation of power sector arrears in the remainder of the program is welcome, as is their focus on further strengthening the performance of power distribution companies and the updating of the power sector arrears reduction plan. Their commitment to move forward with the implementation of the new business climate reform strategy will be key to boost competitiveness and foster investment and private-sector led growth.”