ISLAMABAD: The Inter­national Monetary Fund agreed on Thursday to disburse $510 million to Pakistan as the government met all performance targets in the third quarter of the current financial year.

At a joint news conference in Dubai partially shown live on electronic media, Finance Minister Ishaq Dar and IMF Mission Chief to Pakistan Harald Finger announced successful completion of 11th (second last) review of 36-month programme worth $6.4 billion.

“After productive discussions, the mission and the Pakistani authorities have reached staff level agreement on the completion of the eleventh review under the Extended Fund Facility (EFF) arrangement. The agreement is subject to approval by the IMF Mana­gement and the Executive Board. Upon completion of this review, SDR 360m (about US$510m) will be made available to Pakistan,” said Mr Finger.

Mr Dar said Pakistan’s performance was “highly satisfactory” in the third quarter ending on March 31 and successful completion of 11th review was indicative of the government’s strong commitment to implementing difficult structural reforms in areas of taxation, energy, monetary and financial sectors and public sector enterprises.

He said the government would consolidate the economic gains achieved so far and go ahead towards macroeconomic stability and work for higher growth and jobs’ creation.

“We met all of the end-March 2016 Quantitative Performance Criteria” including those on central bank’s net domestic assets, net international reserves, foreign currency swap / forward position by significant margins,” said the minister.

The quantitative performance criteria on government borrowing from the SBP and budget deficit for end-March 2016 were over-performed, underlining the government’s commitment to sustained fiscal consolidation, he added.

Likewise, the indicative targets of cash transfers through the Benazir Income Support Programme and power sector arrears were also met. Mr Dar said the Federal Board of Revenue had not only achieved its third quarter collection target of Rs715bn but also exceeded it, thus wiping out almost the entire shortfall recorded in the first quarter.

Highlighting this “remarkable achievement”, he said it was for the time after several years that no downward revision had been made in FBR targets and originally fixed targets were on course to be achieved. “Against the indicative target of Rs2,105bn for the first nine months of the year, FBR has collected Rs2,103bn” as collection improved around 19 per cent as compared to the last fiscal year.

The minister said the GDP growth rate for the current year was expected to be around 5pc, down from a target of 5.5pc. The IMF, however, put the growth estimate at 4.5pc for this year and projected 4.7pc for next year, which Pakistan is targeted at 6.2pc.

He said the large-scale manufacturing grew by robust 4.4pc in first eight months, highest in eight years, of current fiscal year compared to 2.4pc last fiscal year. This was contributed by 28pc growth in automobiles, 16pc by fertilisers, 11.6pc rubber products, 11.5pc leather products and 11.2pc by chemicals. Cement dispatches witnessed uptick by over 19pc and there has been a continued credit expansion.

A welcome development, Mr Dar said, was an increase in fixed investment while electricity and gas supplies continued to improve since the start of the current fiscal year and the stock market index crossed 36,265 points a day earlier, highest since August last year, indicating robust economic activity and reflecting investor confidence. Inflation remained contained to less than 3pc during the period July-April of current fiscal year as compared to 8.62pc in 2014 and 4.53pc in 2015.

He said the external sector was stable on the back of continued growth in remittances, flows from international financial institutions, stable exchange rate and low oil prices, which helped contain the current account deficit as foreign exchange reserves stood close to $21bn as of May 9, including the central bank’s $16.125bn and that of scheduled banks’ $4.802bn.

The minister said the government would continue reducing public debt and lay the foundations for a more sustained growth. He said the ratio of FBR taxes to GDP had improved significantly, from 8.45pc in 2013 to 9.5pc in 2015, and was projected at 10.2pc during the current fiscal year. Total tax revenue had increased from 10pc of GDP to 12.2pc.

The IMF mission chief “welcomed the authorities’ strong programme performance in the third quarter” and confirmed that “all end-March 2016 quantitative performance criteria, including the budget deficit target and the floor on the SBP’s net international reserves have been met”.

He said the indicative targets on social spending and power sector arrears had been met while tax target for the first nine months was missed by only Rs3bn. “Most structural benchmarks have also been met,” he said and welcomed government plans to continue with fiscal consolidation in the coming fiscal year, further expand the tax net, strengthen the fiscal responsibility framework, address financial losses in the public enterprises, continue to pursue energy sector reforms, and accelerate competitiveness-enhancing improvements in the business climate. Completing these reforms will help consolidate macroeconomic stability and create conditions for higher growth and jobs’ creation.

Harald Finger said the two sides would meet again in August for discussions on the last review under the programme.

Published in Dawn, May 13th, 2016