ISLAMABAD: Pakistan and International Monetary Fund (IMF) have reached an agreement on a package of measures to complete second to fifth reviews of the authorities’ economic reform program supported by the IMF Extended Fund Facility (EFF).
According to a press release issued Tuesday evening, “Pending approval of the Executive Board, the reviews’ completion would release around US$500 million.”
Finance Minister Dr Abdul Hafeez Shaikh also confirmed the agreement on Twitter, saying that “overcoming the challenges created by the pandemic has required concerted effort”.
(2/2) I would like to thank the Prime Minister for his guidance, and all my colleagues and the IMF staff for their support. This is a good development for Pakistan. https://t.co/UAF7nhn4O1
— Dr. Abdul Hafeez Shaikh (@a_hafeezshaikh) February 16, 2021
In the statement, the IMF said, “The package strikes an appropriate balance between supporting the economy, ensuring debt sustainability, and advancing structural reform.”
It informed that an IMF team held virtual discussions with Pakistani authorities and reached a staff-level agreement today. The team, led by Mission Chief to Pakistan Ernesto Ramirez Rigo, visited Islamabad during February 3-13, to initiate discussions on the second review of the economic reform programme.
At the end of the discussions, Ramirez Rigo said, “The policies and reforms implemented by the Pakistani authorities prior to the COVID-19 shock had started to reduce economic imbalances and set the conditions for improving economic performance.”
He further said that Pakistan’s response was aided by the fiscal and monetary policy gains attained in the first nine months of FY2020. “Aside from health containment measures, this included a temporary fiscal stimulus, a large expansion of the social safety net, monetary policy support and targeted financial initiatives,” the statement read.
“The external current account improved, due to stronger-than-expected remittances, import compression, and a mild export recovery. High-frequency economic data also started to point to a recovery,” it added.
Considering these improvements, the IMF said that the country’s economy is projected to expand by 1.5 percent in FY2021 from the -0.4 percent in FY2020.
