IMF approves $500m under EFF for Pakistan

ISLAMABAD: The IMF’s executive board has approved the 12th tranche worth over $500 million for Pakistan under three-year Extended Fund Facility (EFF).

The IMF Board completed the 11th Review and approved the 12th tranche under the extended arrangement and request for modification of performance criteria and extension of the extended arrangement up to September 30, 2016.

Earlier, the IMF’s sponsored programme for Pakistan was going to expire on September 3 but now it would be ended on September 30.Federal Minister for Finance Ishaq Dar on Monday night confirmed to The News that the IMF board had just granted approval for the release of the next tranche for Pakistan. “Now Pakistan’s foreign currency reserves will cross $22.5 billion till June 30, 2016,” said the minister.

To another question, the minister said that the last review under the IMF program would be due in early August 2016 and Pakistan would successfully end the Fund program.It will be highest-ever foreign exchange reserves held by Pakistan in its whole history as the government expected to receive the approved tranche amount within this week, paving the way for crossing the $22.5 billion mark.

However, the Ministry of Finance in a statement said that the IMF’s Board meeting while according approval for the 11th Review lauded Pakistan’s economic performance.Dar had already unveiled the government’s plan to come out of the IMF programme after the expiry of the existing EFF arrangement because the government had achieved the objective of stabilising the economy by improving public finances and building up foreign currency reserves.

The budget deficit, which stood at 8.2 percent of the GDP in 2013, had been slashed down to 4.3 percent while the foreign currency reserves touched the highest level in recent weeks by touching $21.4 billion on June 10, 2016, which would now go up to $22.5 billion after receiving inflows of $500 million each from the IMF and WB till June 30, 2016.

However, without seeking a fresh bailout package from the IMF, Pakistan will become eligible for the Post Programme Monitoring (PPM) by continuously experiencing scrutiny of the Fund staff on its economic front for two more years even after the expiry of existing $6.4 billion EFF.

Regarding the PPM, the Fund states on its website that the IMF financing providesmember countries with the breathing space they need to correct balance of payments problems. A policy program supported by the IMF financing is designed by the national authorities in close cooperation with the IMF. Continued financial support during the program is conditional on the effective implementation of the policies. A country’s return to economic and financial health during the program and in the medium term ensures that the IMF funds are repaid, and can be made available to other member countries. The post-program monitoring is intended to help ensure the continued viability of a country’s economy after its IMF-supported programme has expired.