WASHINGTON, Oct 27: The IMF board on Monday approved the 6th and 7th PRGF reviews for Pakistan, paving the way for Islamabad to receive 172 million SDRs as two combined installments for its poverty reduction programmes.
The assistance is provided under the poverty reduction and growth facility in a bag of mixed currencies known as SDR. A total of 172 million SDRS translates to 225 million US dollars.
Previously the board meetings were held quarterly but after reviewing Pakistan’s positive economic performance, the board has decided to hold biannual reviews, giving the country six months at a stretch to implement its programmes for poverty reduction.
“The board approved the review and appreciated the efforts of the financial managers in Pakistan for staying on course of reform,” said Mushtaq Malik, economic minister at the Pakistan Embassy in Washington.
“All the macro-economic indicators have been found satisfactory,” he added.
Shigemitsu Sugisaki, Deputy Managing Director, IMF, however, has warned that the political backdrop for reforms in Pakistan remains somewhat fragile. “Such fragility,” he said, “can be exploited by the opponents of reform, and the government may feel constrained in its ability to move ahead on reforms, given the need to preserve social stability.”
But Mr Sugisaki acknowledged that Pakistan was so far the most advanced on the list of the countries receiving PRGF assistance. Its current arrangement with the IMF was approved in late 2001.
In Pakistan, the IMF is providing substantial assistance in strengthening tax administration and designing modern tax systems. “We have also been active in helping to strengthen the financial sectors, and have provided assistance on money and exchange market operations,” said Mr Sugisaki.
Henri Ghesquiere, senior IMFResident Representative in Pakistan, said that when Pakistan asked financial support from the Fund nearly four years ago, the country stood at the brink of default on its foreign debt.
“Hardly any international donor or creditor, private or public, was prepared to provide financing unless the IMF led the way by putting its money in Pakistan. When that money came imports kept flowing into the country, averting a crisis of possibly massive bankruptcy and layoffs and even more grinding poverty,” he added.
He said that unsustainable economic policies, not sudden misfortune, brought Pakistan to the IMF. Throughout the 1980s and ‘90s, economic policies had a fatal flaw: public expenditures, often ill-conceived, exceeded revenue collected by a wide margin, he added. He said that the sustained implementation of the PRGF programmes offers the best hope for Pakistan to raise the standard of living of its people durably.
