March 28, 2002	Thursday	Muharram 13, 1423

Please Visit our Sponsor (Ads open in separate window)

WASHINGTON, March 27: The International Monetary Fund has announced completion of the first review of Pakistan’s performance under a three-year Poverty Reduction and Growth Facility (PRGF) arrangement and cleared the way for the release of a further SDR 86.1 million (about $107 million).

This brings total disbursements to Pakistan under the IMF-supported programme to SDR 172.3 million (about $215 million).

The review was completed only after the IMF board approved two waivers for the non-observance of performance criteria on tax revenue and credit to public enterprises, and modification of the tax revenue performance criterion for end-March 2002 and of one structural performance criterion on tax issues.

The IMF warned that reduction in tax exemptions, subsidies and unproductive expenditure as well as improved tax collection would be required for the future.

A fund press release on Wednesday stressed that it was intended that the relevant programmes under the PRGF would in time be based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners to ensure that each programme was consistent with a comprehensive framework for macro-economic, structural, and social policies to foster growth and reduce poverty.

PRGF loans carry an annual interest rate of 0.5 per cent, and are repayable over 10 years with a five-and-a-half year grace period on principal payments.

After the executive board’s discussion of Pakistan, Anne Krueger, First Deputy Managing Director and Acting Chairperson, issued the following statement:

“The fund commends the (Pakistani) authorities for the broadly satisfactory progress towards the programme’s macroeconomic objectives in a difficult context. However, growth prospects had to be scaled down, reflecting drought and repercussions from September 11 on export orders, and tax revenue was lower than targeted. Inflation was lower than expected, and strong private capital inflows and low imports contributed to a large accumulation of official reserves and a nominal appreciation of the rupee. Progress on the structural front was broadly in line with programme expectations. Most performance criteria and benchmarks through end-2001 were observed.

In view of the economic performance so far, the authorities’ strong commitment to reform, and their recent implementation of corrective measures, waivers were granted for the non-observance of two end-2001 performance criteria.

“Looking ahead, the uncertainties surrounding the economic outlook on account of September 11 and related