Via IMF (Den Internationale Valutafond)

IMF Reaches Staff-Level Agreement with Pakistan on the First Review under the Extended Fund Facility

November 8, 2019

End-of-Mission press releases include statements of IMF staff teams that
convey preliminary findings after a visit to a country. The views expressed
in this statement are those of the IMF staff and do not necessarily
represent the views of the IMF’s Executive Board. Based on the preliminary
findings of this mission, staff will prepare a report that, subject to
management approval, will be presented to the IMF’s Executive Board for
discussion and decision.

  • The authorities and the IMF mission reached staff level agreement on the
    first review under the Extended Arrangement (EFF).
  • All performance criteria for end- September were met with comfortable
    margins and progress continues towards meeting all structural benchmarks.
  • The government’s policies have started to bear fruit, helping to reverse
    the buildup of vulnerabilities and restore economic stability. The external
    and fiscal deficits are narrowing, inflation is expected to decline, and
    growth, although slow, remains positive.
  • Sustaining sound policies and advancing structural reforms remain key
    priorities to enhance resilience and pave the way for stronger and
    sustainable growth.

An International Monetary Fund (IMF) mission led by Ernesto Ramirez Rigo
visited Islamabad from October 28 to November 8, 2019 to conduct
discussions on the first review under the EEF. At the end of the visit, Mr.
Ramirez Rigo made the following statement:

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“The Pakistani authorities and IMF staff have reached a staff-level
agreement on policies and reforms needed to complete the first review under
the EFF. The agreement is subject to approval by IMF management and the
Executive Board of Directors. Completion of the review will enable
disbursement of SDR 328 million (or around US$ 450 million) and will help
unlock significant funding from bilateral and multilateral partners.”

“Despite a difficult environment, program implementation has been good, and
all performance criteria for end-September were met with comfortable
margins. Work continues towards completing the remaining structural
benchmarks for end-September. Significant progress has been made in
improving the AML/CFT framework, although additional work is needed before
March 2020. International partners remain committed to supporting the
authorities’ reform efforts, providing the necessary financing assurances.”

“On the macroeconomic front, signs that economic stability is gradually
taking hold are steadily emerging. The external position is strengthening,
underpinned by an orderly transition to a flexible, market-determined
exchange rate by the State Bank of Pakistan (SBP) and a
higher-than-expected increase in SBP’s net international reserves.
Budgetary revenue collections are growing on the back of efforts on tax
administration and policy changes, and despite the ongoing compression in
import-related taxes. Inflation pressures are expected to recede soon,
reflecting an appropriate monetary stance. Importantly, measures to
strengthen the social safety net are being implemented, and development
spending is been prioritized.

“The near-term macroeconomic outlook is broadly unchanged from the time of
the program approval, with gradually strengthening activity and average
inflation expected to decelerate to 11.8 percent in FY2020. However,
domestic and international risks remain, and structural economic challenges

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“Discussions focused on policies to support Pakistan achieve strong and
balanced growth. Fiscal prudence needs to be maintained to reduce fiscal
vulnerabilities, including by carefully executing the FY 20 budget,
implementing the new Public Finance Management legislation, and continuing
to broaden the tax base by removing preferential tax treatments and
exemptions, while protecting critical social and development spending.
Advancing the strategy for electricity sector reforms, agreed with
international partners, is important to put the sector on a sound footing,
and remove recurrent arrears and accumulation of debt. Further efforts to
strengthen SOE governance and operations, advance anti-corruption reform,
and improve the business environment are key to mobilize investment and
support growth and job creation. The authorities recognize that decisive
implementation of these policies is indispensable for entrenching
macroeconomic stability and restoring robust and balanced growth.”

“The IMF team is grateful to the Pakistani authorities for open and
constructive discussions and their hospitality.”

IMF Communications Department

PRESS OFFICER: Olga Ilinichna Stankova

Phone: +1 202 623-7100Email: