Farooq Naeem—AFP
IMF delegation head says Islamabad has strengthened its economy over the last year-and-a-half.
Pakistan in June will get an installment of $506 million as part of an ongoing loan facility from the International Monetary Fund after a successful review of its economic performance, the finance minister said Monday.
“The seventh review was completed successfully today, for which an IMF team came to Islamabad,” Ishaq Dar told a joint press conference with IMF delegation head Harald Finger. “After the approval from the IMF board, some $506 million should be released to Pakistan in June,” Dar said.
Dar said the country had satisfied qualitative performance criteria relating to its net international assets, net domestic assets and borrowing by the Central Bank. “All these three were right on target.”
The minister said Pakistan would achieve the fiscal deficit target of 4.9 percent of GDP by the end of the fiscal year on June 30, and for next year the target would be 4.3 percent.
Finger said Pakistan had made “significant progress” over the last year and a half in strengthening its economy. He said the IMF mission and Pakistani authorities had reached staff-level agreement on economic and financial policies, which would be considered by the IMF executive board in June.
“After completion of this review, SDR 360 million will be made available to Pakistan,” Finger announced.
The IMF official said the economy was improving. “Pakistan’s economy continues to gradually improve, helped by macroeconomic stability, lower oil prices, robust remittances and higher supply of gas and electricity.”
Real GDP growth was expected to reach 4.1 percent this fiscal year and accelerate to 4.5 percent next year, he added. “Average headline inflation dropped to 2.1 percent in April, but is expected to increase in the coming months, reflecting the stabilization in international petroleum prices following their recent decline.”
Excluding next month’s payment, the IMF since late 2013 has provided $3.7 billion out of a $6.6 billion loan. The loan was granted on condition that Pakistan—which was suffering an energy crisis—carried out extensive economic reforms, particularly in the energy and taxation sectors.
Standard and Poor’s last week revised the country’s credit rating outlook from stable to positive and forecast higher GDP growth for 2015 to 2017.