IMF com­pletes 10th re­view un­der the ex­tended fund fa­cil­ity for Pak­istan

The Pak Banker - - FRONT PAGE -

Pak­istan's econ­omy is grad­u­ally gain­ing strength and its short-term vul­ner­a­bil­i­ties are also re­ced­ing, a se­nior of­fi­cial from the In­ter­na­tional Mone­tary Fund (IMF) has said. The deputy manag­ing di­rec­tor of IMF, Mit­suhiro Fu­ru­sawa, made the com­ment in a state­ment is­sued on Satur­day af­ter the fund's ex­ec­u­tive board ap­proved the next tranche of $502 mil­lion for Pak­istan.

Fu­ru­sawa urged Islamabad to con­tinue im­ple­ment­ing eco­nomic re­forms to strengthen these gains, Dawn on­line re­ported. "Build­ing on these gains, fur­ther progress, in­clud­ing in the area of struc­tural re­forms, is needed to gen­er­ate strong and in­clu­sive growth and make the econ­omy more re­silient and com­pet­i­tive," he said. On Fri­day, the ex­ec­u­tive board an­nounced the com­ple­tion of the tenth re­view of Pak­istan's eco­nomic per­for­mance un­der a three-year pro­gramme sup­ported by an Ex­tended Fund Fa­cil­ity ar­range­ment.

The board also ap­proved the coun­try's re­quest for mod­i­fi­ca­tion of the endMarch 2016 per­for­mance cri­te­rion on the state bank's stock of net for­eign cur­rency swaps/for­ward po­si­tion. The de­ci­sion en­ables the im­me­di­ate dis­burse­ment of about $502.6 mil­lion, bring­ing the to­tal dis­burse­ments to Pak­istan un­der this ar­range­ment to $5.53 bil­lion.

Mean­while, The Ex­ec­u­tive Board of the In­ter­na­tional Mone­tary Fund (IMF) on March 25, 2016 com­pleted the tenth re­view of Pak­istan's eco­nomic per­for­mance un­der a three-year pro­gram sup­ported by an Ex­tended Fund Fa­cil­ity (EFF) ar­range­ment. In com­plet­ing the re­view, the Ex­ec­u­tive Board also ap­proved the au­thor­i­ties' re­quest for mod­i­fi­ca­tion of the end-March 2016 per­for­mance cri­te­rion on the State Bank of Pak­istan's stock of net for­eign cur­rency swaps/for­ward po­si­tion. The Ex­ec­u­tive Board's de­ci­sion en­ables the im­me­di­ate dis­burse­ment of an amount equiv­a­lent to SDR 360 mil­lion (about US$502.6 mil- lion), bring­ing to­tal dis­burse­ments SDR 3.96 bil­lion (US$5.53 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 (US$6.64 bil­lion at the time of ap­proval of the ar­range­ment) or 216 per­cent of Pak­istan's cur­rent quota at the IMF. Fol­low­ing the Ex­ec­u­tive Board's dis­cus­sion of Pak­istan, Mr. Mit­suhiro Fu­ru­sawa, Deputy Manag­ing Di­rec­tor and Act­ing Chair is­sued the fol­low­ing state­ment: "Eco­nomic ac­tiv­ity has con­tin­ued to grad­u­ally gain strength, and short-term vul­ner­a­bil­i­ties have re­ceded.

to Build­ing on these gains, fur­ther progress, in­clud­ing in the area of struc­tural re­forms, is needed to gen­er­ate strong and in­clu­sive growth and make the econ­omy more re­silient and com­pet­i­tive.

"The au­thor­i­ties' con­tin­ued com­mit­ment to reach the pro­gram's fis­cal targets is wel­come. Fur­ther widen­ing the tax net and en­sur­ing the fair­ness of the tax sys­tem, to­gether with pru­dent man­age­ment of bud­getary spend­ing and close co­or­di­na­tion with the prov­inces, re­main im­por­tant to con­sol­i­date the gains in ad­dress­ing Pak­istan's fis­cal vul­ner­a­bil­i­ties while gen­er­at­ing the nec­es­sary re­sources for higher pri­or­ity spend­ing in ar­eas such as in­fra­struc­ture, health, and ed­u­ca­tion.

"The mone­tary pol­icy stance re­mains ap­pro­pri­ate. Fall­ing oil prices have helped ef­forts to bol­ster for­eign re­serves. While the es­tab­lish­ment of an in­de­pen­dent mone­tary pol­icy com­mit­tee has been an im­por­tant step in ad­vanc­ing cen­tral bank au­ton­omy, ad­dress­ing re­main­ing rec­om­men­da­tions of the 2013 Safe­guards As­sess­ment will be key to strengthen it fur­ther. "Re­in­forc­ing fi­nan­cial sec­tor re­silience re­mains per­ti­nent and ef­forts to en­hance cap­i­tal buf­fers of banks are en­cour­ag­ing. The re­cent amend­ments to the AML Act con­sti­tute a first step to widen the ap­pli­ca­tion of AML tools to the pro­ceeds of tax crimes.

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