IMF review: Performance critera for end-September met comfortably, says mission chief – Business

The International Monetary Fund (IMF) mission and local authorities reached a staff-level agreement on the first review under the Extended Fund (FEP) for Pakistan after it was observed that the performance criteria at the end of September "were they met comfortable margins. "

According to a press release issued by the mission on Friday, the two sides reached an agreement during the visit of an IMF mission, led by Ernesto Ramírez Rigo, from October 28 to November 8 to Islamabad. During this time, meetings were held with the prime minister and the economic team of the government, provincial governments and other interested parties.

The IMF mission, on the basis of its preliminary conclusions, will prepare a report that, subject to the approval of the management, will be presented to the IMF Executive Board for discussion and decision-making.

"All performance criteria by the end of September were met with comfortable margins and progress continues towards meeting all structural benchmarks," said the mission in its statement, which was also tweeted by the Federal Minister of Economic Affairs, Hammad Azhar

According to the statement, government policies have begun to bear fruit, helping to reverse the accumulation of vulnerabilities and restore economic stability.

"External and fiscal deficits are decreasing, inflation is expected to decrease and growth, although slow, remains positive," the statement said.

"Maintaining strong policies and advancing structural reforms remain key priorities to improve resilience and pave the way for stronger and more sustainable growth."

Rigo, the head of the mission, at the end of the visit confirmed that the agreement had been reached.

"The Pakistani authorities and IMF staff have reached a staff-level agreement on the policies and reforms necessary to complete the first review under the EFF. The agreement is subject to the approval of the IMF administration and the Executive Board of Directors." , said.

He added that the completion of the review will allow the disbursement of SDR 328 million (or about US $ 450 million) and will help unlock significant funds from bilateral and multilateral partners.

“Despite a difficult environment, the implementation of the program has been good, and all performance criteria by the end of September were met with comfortable margins. Work continues to complete the remaining structural benchmarks by the end of September. "

Speaking about measures to finance terrorism and money laundering, he said: "Significant progress has been made in improving the AML / CFT framework, although additional work is needed before March 2020. International partners remain committed to support the reform efforts of the authorities, providing the necessary financial guarantees. "

"On the macroeconomic front, signs are constantly emerging that economic stability is gradually consolidating," said Rigo. The head of the mission said the external position is strengthening, underpinned by an orderly transition to a flexible exchange rate determined by the market by the State Bank of Pakistan (SBP) and a larger than expected increase in reserves SBP net internationals.

"The collection of budgetary revenues is growing as a result of efforts in the tax administration and changes in policies, and despite the continued compression of import-related taxes. Inflationary pressures are expected to decrease soon, reflecting an adequate monetary stance. It is important to highlight that the measures to strengthen society are implementing safety nets and development spending is prioritized. "

Speaking about the country's macroeconomic outlook, he said: “The short-term macroeconomic outlook has practically not changed since the time of program approval, and the gradual strengthening activity and average inflation are expected to slow down to 11.8 percent in fiscal year 2020. However, national and international risks persist and structural economic challenges persist. "

“Discussions focused on policies to support Pakistan to achieve strong and balanced growth. Fiscal prudence must be maintained to reduce fiscal vulnerabilities, including through the careful execution of the budget for fiscal year 20, the implementation of the new Public Finance Management legislation and the extension of the tax base by eliminating preferential tax treatments and exemptions, while protecting critical social and development expenses. "he added.

"Advancing the strategy for reforms of the electricity sector, agreed with international partners, is important to put the sector on a solid basis and eliminate recurring arrears and debt accumulation," said the head of mission.

He said that additional efforts to strengthen the governance and operations of public companies, advance anti-corruption reforms and improve the business environment are key to mobilizing investment and supporting growth and job creation.

"The authorities recognize that the decisive implementation of these policies is essential to strengthen macroeconomic stability and restore robust and balanced growth."



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