The International Monetary Fund (IMF) and Pakistan have reached anagreement on a package of measures to complete second to fifth reviews ofthe authorities’ reform program supported by the IMF Extended Fund Facility(EFF).
The package strikes an appropriate balance between supporting the economy,ensuring debt sustainability, and advancing structural reform. Pendingapproval of the Executive Board, the reviews’ completion would releasearound US$500 million.
The IMF said that the release of fund is subject to the approval of theExecutive Board.
“The policies and reforms implemented by the Pakistani authorities prior tothe COVID-19 shock had started to reduce economic imbalances and set theconditions for improving economic performance,” said IMF Team lead ErnestoRamirez Rigo.
“Most of the targets under the EFF-supported programme were on track to bemet. However, the pandemic disrupted these improvements and required ashift in authorities’ priorities towards saving lives and supportinghouseholds and businesses,” he added.
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“The State Bank of Pakistan’s monetary and exchange rate policies haveserved Pakistan well and were critical in helping to navigate the COVID-19shock,” said.
He further said that the international reserves have increased since thestart of the programme—with gross reserves almost doubling to $13 billionuntil January 2021 and net international reserves (NIR) increasing by overUSD 9 billion until December 2020.
“The shock absorption displayed by the market-based exchange rate, allowedthe SBP’s to pre-emptively proceed to a large easing of monetary policy,and a sizeable expansion of refinancing facilities,” Rigo said.
