ISLAMABAD - Pakistan and International Monetary Fund (IMF) would now hold economic review talks in Dubai after the Fund team’s refusal to visit Islamabad in the wake of recent wave of terrorist attacks in different parts of the country.
"The talks between Pakistan and IMF will start from February 1, 2014 in Dubai. The talks will be held to review the country's economic situation of the second quarter (October-December) of the ongoing financial year 2013-2014 before releasing third tranche under extended fund facility (EFF)", said a finance ministry official while talking to The Nation on Monday. Pakistan's high-level economic team would visit Dubai in next few days to attend the talks, he added.
Earlier, the talks were scheduled to start from today (Tuesday) in Pakistan. However, the international lender refused to visit Pakistan due to the deteriorated law and order situation of the country. Sources informed that talks might continue for seven to ten days, which would review the Pakistan's economic situation of October-December 2013 period prior to releasing third tranche in March 2014.
The Fund staff and the Pakistani authorities will review qualitative and quantitative performance of the benchmarks agreed under the $6.64 billion programme. Islamabad will strive to convince the Fund staff for release of the third tranche worth $545 million by March this year after approval from the Fund's executive board.
Pakistan believes that it could get the next third tranche, as it had fulfilled all the conditions under the EFF in the second quarter. The government was struggling to maintain the target of Net International Reserves (NIR) due to massive outflow of dollars. However, the Fund has modified the time bound target of Net International Reserves (NIR) downward by $2 billion for the second quarter (end-December 2013), thereby enabling Pakistan to become eligible for the disbursement of the next tranche under Extended Fund Facility (EFF).
Similarly, the government has controlled the budget deficit at 2.5 per cent of the GDP during first half (July-December) of the ongoing fiscal year, which seems a positive sign. Pakistan would inform IMF that privatization process has been started by the government, as eight public sector entities are in privatization process.
The IMF had already released two tranches worth of $1.09 billion for Pakistan under EFF. The facility amounting to Special Drawing Rights (SDR) 4.393 billion ($6.64 billion, or 425 percent of Pakistan's quota), was approved by the Fund on September 4, 2013.
The EFF is a 3-year arrangement for Pakistan by the IMF to support the country's economic reform programme to promote inclusive growth.