ISLAMABAD: Despite three missed targets, the International Monetary Fund (IMF) cleared on Thursday Pakistan’s economic bailout package for disbursement of next instalment of around $502 million by mid-December.

“The mission and Pakistani authorities have reached staff-level agreement on the completion of the ninth review under the Extended Fund Facility arrangement,” IMF’s mission chief to Pakistan Harald Finger said at a press conference which was attended also by Finance Minister Ishaq Dar.

About $502m would be made available to Pakistan, Mr Finger added.

He said Pakistan needed to work hard on four weak areas — taxation, energy sector reforms, restructuring and privatisation of public sector enterprises and improvement in investment climate.

Mr Dar said the IMF executive board was expected to approve disbursement of next tranche of $502m in its meeting on December 15.

He said the fund had revised its inflation forecast to 3.7 per cent for the current year against its previous estimate of 4.7pc and kept economic growth rate projection at 4.5pc but the government would get close to its target of 5.5pc GDP growth rate.

He said Pakistan had met foreign exchange reserves target for end-September as they stood above $20.073 billion with minor subsequent movements. Also, the government has met targets on net international reserves, including forward swaps and borrowing from the central bank.

However, Mr Dar conceded that the government had missed revenue target by Rs40bn in the first quarter of the fiscal year and consequently the target for fiscal deficit. He said the shortfall had been reduced to Rs23bn with expenditure management — the specifics of which he declined to divulge.

The government, he said, would achieve fiscal deficit limit of 4.3pc.

He said the country had also missed targets for net domestic assets. The good thing, he said, was that revenue collection posted a 22pc growth in October, compared to the same month of last year with the tax machinery having collected Rs223bn.

The government had also met targets on policy rate corridor, revised audit policy and conversion of Computerised National Identity Card number into national tax number and on improving recoveries and reducing losses of the power sector.

He said the government was able to restrict circular debt growth to Rs26bn against a permissible limit of Rs36bn.

The minister said Pakistan had completed talks on development policy credit (DPC) on energy with the IMF, the World Bank and the Asian Development Bank. He said the World Bank was expected to approve disbursement of $500m loan under international development assistance window on November 12. Likewise, the ADB board is scheduled to meet on November 21 for disbursement of $400m under the DPC.

Replying to a question, the IMF mission chief said economic activity continued to improve in Pakistan while challenges also remained. “Real GDP is expected to grow by about 4.5pc, helped by lower oil prices, planned improvements in energy supply and investment related to the China Pakistan Economic Corridor.”

Published in Dawn, November 6th, 2015

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