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IMF releases fifth tranche of $1.13bn for Pakistan

IMF releases fifth tranche of $1.13bn for Pakistan

Pakistan will receive $1.13 billion on 18 May as the fifth tranche of its total loan package of about $10.66 billion from the International Monetary Fund. The IMF has also accepted Pakistan’s request for waiver of two performance criteria for the period ended in March. The waivers are aimed to give room for “urgent security outlays and avoid undue cuts in other priority spending.”

In return, the government pledged to levy the value added tax (VAT) from 1 July, as scheduled. It also had to accept some remedial actions proposed by IMF. The lending agency hoped that the loan package would help the country overcome its economic vulnerabilities caused by a volatile security situation and persistent inflation.
In a statement after the completion of the fourth review of Pakistan’s economic performance under a programme supported by a standby arrangement, IMF’s Deputy Managing Director Murilo Portugal said, “against a background of adverse security developments and a rapidly changing political environment, economic conditions have improved.”
“Real GDP growth has begun to pick up and the external position has strengthened. Preparations for important and politically difficult tax reform have moved forward and there has been steady progress in financial sector reform,” declared Mr. Portugal.
The IMF, however, expressed reservations on persistent inflation, security related spending pressures, energy sector problems and shortfalls in revenue collection and external financing. “These challenges highlight the importance of pursuing a credible fiscal consolidation, maintaining a flexible exchange rate and a cautious stance to monetary policy, and improving governance,” Portugal said.
Pakistan has drawn so far, about $7.27 billion which includes the latest disbursement. The waivers agreed on the government’s request include combining the remaining three installments into two.



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