Dubai: Pakistan and the International Monetary Fund (IMF) have completed negotiations for 3-year fund facility for $6.4 billion (Dh23.5 billion), leading to the release of $497 million, indicating the government’s commitment to implement structural reforms, Pakistan’s finance minister said on Thursday,
“The major performance criteria’s have been met. The quantitative performance criteria of the state bank, regarding net domestic assets, foreign currency swaps, have all been met with significant margin. The borrowing from the state bank by the federal government. the budget deficit for 6 months ended on December 31 have also been performed with margin,” Mohammad Ishaq Dar, finance minister of Pakistan told a press conference. The budget deficit has been brought down to 5.37 per cent of GDP in the fiscal 2014-15, from the earlier 8 per cent.
“We are determined to continue on a path of fiscal consolidation to achieve our budget deficit target of 4.3 per cent of GDP in fiscal year 2015/16. We are committed to reduce public debt and lay the foundations for a more sustained growth,” said Dar in a statement.
Pakistan’s development budget has doubled to 700 billion Pakistani rupees, and social spending has trebled to over Rs100 billion despite halving of fiscal deficit.
On the one hand we had tight fiscal discipline, we had efforts to grow our revenues, and the flow of additional resources have been either diverted for development expenditure or for social safety net expenditure,” Dar said.
Robust activity
Pakistan is projected to grow at 4.5 per cent, according to the IMF, while the government is consistently working to achieve a growth of 5 per cent or more.
“The economic activity remains robust. Although a weak cotton harvest, declining exports and a challenging external environment are weighing on growth prospects, real GDP is expected to reach 4.5 per cent in the fiscal year 2015/16,” the IMF said in a statement. The country grew 4 per cent in the fiscal year 2013/14, and then 4.24 per cent in the following year.
The IMF said gross international reserves reached $15.9 billion in December 2015, up $15.2 billion at the end of September 2015, covering close to four months of prospective imports.
“The authorities programme continues to firm up macroeconomic stability with stronger public finances and foreign exchange reserve buffers and expanded protection of the most vulnerable under the Benazir Income Support Programme. Further consolidation of these gains and strengthening the long-term resilience of the economy is the main priority in the period ahead,” the IMF said.
