Imran Nazir & Najm ul Hassan
ISLAMABAD -The International Monetary Fund (IMF) has approved a loan of $6 billion for Pakistan, a 39-month extended arrangement to support the country’s economic reform program.
After approval of the loan under Extended Fund Facility (EFF) by the Executive Board of IMF, Pakistan is now eligible to immediately receive first tranche of $1 billion, an IMF statement said.
The fund will quarterly review the performance of Pakistan over 39 months.The EFF-supported program would help Pakistan to reduce economic vulnerabilities and generate sustainable and balanced growth.
The statement added that the programme would focus on a decisive fiscal consolidation to reduce public debt and build resilience while expanding social spending.
It will also try to ensure a flexible, market-determined exchange rate to restore competitiveness and rebuild official reserves besides eliminating quasi-fiscal losses in the energy sector, strengthening institutions and enhancing transparency.
Meanwhile, Advisor to Prime Minister on Finance Dr Abdul Hafeez Shaikh said the IMF’s support bodes well for the country and is a testament to the government’s resolve for ensuring financial discipline and sound economic management.
Welcoming the IMF approval of $6 billion loan for Pakistan, Hafeez Shaikh said in a tweet that structural reform agenda which includes improving public finances and reducing public debt through revenue reforms is key part of the program.
“Our program supports broad based growth by reducing imbalances in the economy. Social spending has been strengthened to completely protect vulnerable segments”, the advisor added.
Advisor to Prime Minister on Finance, Abdul Hafeez Shaikh has said that record 137,000 people declared their assets and deposited taxes worth Rs 70 billion under the Asset Declaration Scheme which expired on July 3.
This is the biggest number of beneficiaries in a single scheme in Pakistan’s history which made it unique to other schemes in which the people also declared their assets worth of over Rs 3000 billion, he said while addressing a press conference here flanked by Minister for Revenue Hammad Azhar and Chairman Federal Board of Revenue (FBR) Shabbar Zaidi.
With regard to the International Monetary Fund (IMF) approval of $6 billion loan for Pakistan, the Advisor said the decision was important in the sense that the international powers and institutions were now expressing satisfaction over Pakistan as the government had conveyed a message that being a responsible country, it was maintaining the fiscal discipline, mobilizing taxes and taking difficult decision to strengthen its economy.
He said with the approval of bail out package by the IMF, other international institutions had now started releasing funds for the country.
“The Asian Development Bank (ADB) is willing to extend an additional $3.4 billion loan out of which $2.1 billion was likely to be received during current year,” he said hoping to get even more funds from the Bank.
Similarly he said the World Bank was also ready to provide loans to Pakistan.
He clarified that, these loans from ADB and WB would not be linked to any projects but for the purpose of budgetary support and general expenditures.
Dr Abdul Hafeez Shaikh said that first tranche of $1 billion under IMF Extended Fund Facility (EFF) program would be received by July 8, adding that the Fund would provide $2 billion every year.
He said that the mark up at the rate of 3% would be applicable on the facility and payback period would be around 10 years, adding that there were not any additional conditions for the program.
The adviser said that negotiations with IMF were held in a cordial manners and every member had expressed their confidence on economic policies of the government that was commendable.
He said that history was evident that Pakistan had entered in IMF program many times that had also helped in national economic growth but that growth was proved short term due to policies of the governments of that time.
He said measures would be introduced for sustaining the positive impacts of the program and provide a base for long term sustainable economic growth and social development in the country.
Highlighting the fiscal constraints of the economy, he said that the national economy was passing through a crucial stage of its economic history, adding that debts had been soared to Rs31,000 billion.
The government had taken tough decisions to pay back these loans and used different options including acquiring the deposits form the brotherly countries including Saudi Arabia, United Arab Emirates and Qatar, he added.
Besides, he said that agreements were made with Kingdom of Saudi Arabia and Islamic Bank for oil facility on differed payments, adding that the IMF program would further boost the confidence of international financial institutions and sent a message to the world that that we know how to create balance in our income and expenditures.