Tue. Oct 22nd, 2019

IMF Executive Board approves US$6 billion 39-Month Extended Fund Facility Arrangement for Pakistan

Aftab Ahmed

Islamabad: The Executive Board of the International Monetary Fund (IMF) on Wednesday approved a 39-month extended arrangement under the Extended Fund Facility (EFF) for Pakistan for an amount of SDR 4,268 million (about US$6 billion or 210 percent of quota) to support the authorities’ economic reform program.

The EFF-supported program will help Pakistan to reduce economic vulnerabilities and generate sustainable and balanced growth focusing on: a decisive fiscal consolidation to reduce public debt and build resilience while expanding social spending; a flexible, market-determined exchange rate to restore competitiveness and rebuild official reserves; to eliminate quasi-fiscal losses in the energy sector; and to strengthen institutions and enhance transparency.

The Executive Board’s approval allows for an immediate disbursement of SDR 716 million (or about US$1 billion). The remaining amount will be phased over the duration of the program, subject to four quarterly reviews and four semi-annual reviews.

IMF again focused on bringing primary deficit to 0.6 percent of GDP through tax policy revenue mobilization measures to eliminate exemptions, curtailing special treatments and improving tax administration as witnessed in measures taken by government in FY20 budget.

To highlight, IMF has sought commitment from government authorities to strengthen the State Bank of Pakistan’s operational independence and mandate that will allow SBP to focus on reducing inflation.

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