On Thursday, The International Monetary Fund and The Government of Pakistan announced that Pakistan is at the verge of receiving the Special Drawing Rights (SDR) $73 million under the $6.4 billion Extended Fund Facility (EFF).
In addition the eleventh review of Pakistan’s economic performance under the three year programme has just been completed (by IMF staff mission).
Pakistan is believed to meet almost all of its targets (with regards to overall performance) and at June, quantitative performance criteria was reviewed. It showed significant margins.
Gross Domestic Product showed a significant improvement. In fact this year’s GDP recorded the highest growth rate of about 4.7% and in 2017, the targeted growth rate is at 5.7%. In few years to come, they hope of a GDP of 7%. Pakistan also agrees on meeting targets on performance of the EFF and with back up support, IMF also agrees.
With support from the private sector credit growth, investment upturn related to China and buoyant construction activity, GDP is expected to grow at 5% later this year or in 2017.
By implementing sustainable policies, Pakistan’s economy has made progress in strengthening the macroeconomic and financial stability of the country.
Also, Inflation is expected to be at 5.2% and Pakistan’s rupee is more stable as a result of low oil prices, international financial institution and remittances. These have helped narrowed the current account deficits. Foreign reserves are about $23 billion and with the inclusion of EEF the programme the net international reserves of Stake bank Pakistan has increased from $2.5 billion to %7.5 billion.
As the EFF programme nears its end, Pakistan’s finance minister said the economy is in a much stronger position compared to the time at which the government opted to go for the IMF facility. While the banking sector has improved its performance in terms of earning and solvency, it has high return on assets of 2.2 per cent and strong capital adequacy ratio of 16.1 per cent.
IMF feels the need to raise Pakistan’s growth, privatizing loss making sector and reduce fiscal cost are all ways to make Pakistan more efficient.