CONSULATE GENERAL OF PAKISTAN
4th August, 2016
Successful completion of Pakistan-IMF Extended Fund Facility Program
Senator Mohammad Ishaq Dar, Finance Minister and Mr. Harald Finger, IMF Mission Chief addressed a joint press conference on the successful completion of 12th Review under IMF Extended Fund Facility Programme her at Dubai.
The Minister said that Pakistan and the IMF had successfully completed negotiations on the Twelfth and final R-eview under the 3-year Extended Fund Facility (EFF) program for an amount of $6.4 billion.
He pointed out that the successful completion of the last Review was indicative of government’s strong commitment in implementing difficult structural reforms in the areas of taxation, energy, monetary/financial sectors and public sector enterprises.
Overall Program Performance
He said our performance throughout the program culminating in the Twelfth Review had been highly satisfactory: “We met the end-June 2016 Quantitative Performance Criteria on Net International Reserves, Foreign currency swap/forward position, and government borrowing from SBP by significant margins”. The targets on Net Domestic Assets and budget deficit were missed marginally, he stated. He said that the indicative target for end-June, 2016 on targeted cash transfers through BISP and on power sector arrears were met.
The Minister for Finance said the Federal Board of Revenue (FBR) not only achieved its annual target of RS.31 04 billion but exceeded it. “This indeed is a remarkable achievement as no downward revision was made in FBR revenue targets and the originally fixed target was achieved and exceeded which is an unprecedented accomplishment and speaks of the success of the economic policies being followed by the present Government”, he observed. He said that the performance of FBR became even more creditable when viewed in the context of the shortfall of Rs.40 billion recorded in the first quarter. He stated that in the subsequent quarters, the indicative targets were met wiping out the deficit of the first quarter. “Against an end-year target of Rs.31 04 billion, FBR collected Rs.3115 billion, according to provisional figures, which shows a growth in excess of 20 percent, over Rs.2589 billion collected in FY2015”, he mentioned. He said that in the process, the figure of FBR’s tax-to-GDP ratio registered a substantial increase of one percent.
Ishaq Dar said the government achieved real GDP growth rate of 4.71 percent in FY 2016, which was the highest in the last 8 years. He mentioned that since FY 2014, the government had maintained GDP growth rate of above 4 percent. “For the next fiscal year, GDP growth is targeted at 5.7 percent which will gradually steer to 7 percent in FY 2017”, he said.
The Minister said that the industrial sector recorded a growth of 6.8
percent during FY 2016 which was the highest in the last eight years.
He further said that the LSM growth remained robust at 4.61 percent
during FY 2016 compared to 3.29 percent last fiscal year while
Automobiles registered growth at 23.4 percent followed by Fertilizers 16
percent, Rubber products
11.6 percent, Leather products 12.2 percent, and Chemicals 10 percent, Cement 10.4 percent and its dispatches witnessed uptick by over 17 percent; and there has been a continued credit expansion. A welcome development is the increase in fixed investment. Electricity and gas supplies continued to improve since the start of the current fiscal year. The Minister hoped that the CPEC would also play significant role in further boosting economic activities.
During the press conference, the Finance Minister said that the
Pakistan Stock Exchange (PSX) had scaled new height of 39,800 index on
01st August, 2016 crossing the highest index achieved
previously in August, 2015 indicating robust economic activity and
reflecting investor confidence. He informed that the Inflation remained
contained to less than 3 percent at 2.89
percent during the period FY 2016 as compared to 8.62 percent in
FY 2014 and 4.53 percent in FY 2015.
Balance of Payments
Commenting on the external sector, the minister said the sector was
stable on the back of continued flows from IFls, low oil prices, rising
remittances albeit at a slower pace, which helped narrow down the
current account deficit and maintained stability in foreign exchange
market. He stated that the foreign exchange reserves increased to $23
billion as of 22nd July 2016
of which SSP reserves stood at $18.037 billion and that of scheduled banks at $4.960 billion. The net International Reserves of the SSP have increased from a low of negative $2.5 billion at the start of the program to positive $7.5 billion by end-June 2016, Ishaq Dar said.
Following is the text of his press conference:-
Financial and Fiscal
Performance of the banking sector remained steady with higher earnings and robust solvency. The sector has high Return on Assets (RoA) of 2.2 percent and strong Capital Adequacy Ratio (CAR) of 16.1 percent, well above the 10.25 percent minimum regulatory requirement.
with measures to make the sector self-sustainable in line with the demands of a modern power sector;
II. We have added imported Liquefied Natural Gas
(LNG) to the system, which has improved
energy supply -in the country, especially to the industrial sector, as the import of LNG has doubled to 400 mmcfd.
Business Climate Reforms
Public Sector Entities (PSEs)
Before closing, the Minister has reiterated that Pakistan is committed to successfully implement the macroeconomic stability program announced by the Government in June 2013; and positive achievement in meeting the performance criteria under the Program reflected the seriousness with which the Program is being concluded. It is not only the quantitative targets but also the rich agenda of structural reforms being undertaken with the aim of stabilization of economy and creation of room for faster and inclusive growth, and poverty reduction.
We have successfully completed the negotiations of the last Review.
This has been a good team effort from both sides. As we move forward,
our effort would be to consolidate the economic gains achieved so far
towards macroeconomic stability and work towards higher growth and
Before conclusion of the joint press conference, the Minister complimented Mr. Harald Finger, the IMF Mission Chief and his team for an outstanding job they have done in conducting the last Quarterly Review.