Officials say latest installment based on Pakistan’s economic performance from Jan. 26 to Feb. 4.
The International Monetary Fund announced Thursday it would release the latest installment worth $497 million of a three-year economic bailout package to Pakistan, while urging Islamabad to implement planned energy sector reforms and restructure loss-making public companies.
The IMF’s delegation head Harald Finger said in a statement that the decision was taken after a review of Pakistan’s economic performance from Jan. 26 to Feb. 4, and that the money would be transferred after approval by the board.
Finger said that the real GDP growth rate was expected to reach 4.5 percent for the 2015-16 financial year due to lower oil prices, planned improvements in the energy supply, investment related to the China Pakistan Economic Corridor (CPEC), buoyant construction activity, and acceleration of credit growth.
“Economic activity remains robust. Although a weak cotton harvest, declining exports, and a more challenging external environment are weighing on growth prospects,” he said. “While many structural benchmarks have been met, measures pertaining to the energy sector reform and restructuring of loss-making public enterprises are yet to be implemented,” he added.
The $6.6-billion bailout agreed in 2013 was granted on condition that Pakistan—which was and still continues to suffer an energy crisis—carry out restructuring in the energy and taxation sectors.
Addressing a press conference with Finger in Dubai, Finance Minister Ishaq Dar said that his government had successfully reduced fiscal deficit and brought down inflation. “For the first six months of the year, inflation is down to 2.1 percent,” Dar said, referring to the period from July 2015 to January 2016, the start of the financial year.
Dar said that the target for budget deficit was 4.3 percent this year, which over the years had been brought down from 8.8 percent. He added that the government had chalked out a “robust plan” for loss-making public sector companies, which are causing losses amounting to billions of dollars over the decades. These include Pakistan International Airlines, the bloated and badly managed national carrier that loses hundreds of millions of dollars a year. Islamabad plans to partly privatize the carrier later this year.