The International Monetary Fund (IMF) is likely to approve $502 million for Pakistan on Friday.

The IMF’s executive board meeting has been called on December 18 to consider its staff mission report on ninth economic review. The IMF Executive Board calendar updated on its website shows that its board meeting has been scheduled on December 18 under title “Article IV consultation, ninth review under the Extended Arrangement, request for waivers of non-observance of performance criteria, and request for modification of a performance criterion”.

The board is likely to approve $502 million for Pakistan that had already completed the prior actions including mini-budget. “We are hoping that IMF will approve next tranche of $502 million, which will further build the country’s foreign exchange reserves,” said an official of the Ministry of Finance. Total liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stand at $20.45 billion. “The reserves would go near to $21 billion with the inflow of $500 million from the IMF”.

Pakistan had so far received $4.54 billion from the IMF under a 36-month programme supported by an Extended Fund Facility (EFF) arrangement of $6.64 billion approved in September 4, 2013.

Pakistan and IMF held talks for the ninth economic review in Dubai and Islamabad from October 26 to November 5. Pakistan sought waivers of missing of fiscal deficit target due to shortfall in revenue collection and the net domestic assets target set by the IMF during July-September of the year 2015-2016.

The Fund had shown serious reservations over the tax collection efforts of the Federal Board of Revenue, which missed the quarterly target of Rs640 billion by Rs40 billion during first quarter of the current fiscal year. The IMF had linked the release of $502 million tranche with the imposition of new taxes.

Therefore, Finance Minister Ishaq Dar on November announced Rs40 billion mini budget on the direction of IMF.

The government has already missed the first quarter budget deficit target of Rs306 billion due to the FBR’s failure and sought a waiver from the IMF Board in this regard. The country’s budget deficit was recorded at Rs328.2 billion (1.1 per cent of the GDP), as expenditures stood at Rs1265.2 billion against the revenues of Rs 937 billion during July-September, according to the latest figures of the Ministry of Finance. Pakistan will have to restrict budget deficit at Rs625 billion (2.03 percent of the GDP) during first half (July-December) of the current fiscal year under the IMF’s conditions.

The IMF stated that end-September 2015 quantitative performance criteria on the State Bank of Pakistan (SBP’s) net international reserves, government borrowing from the SBP, and foreign currency swap/forward position were met and so were the indicative ceiling on accumulation of power sector arrears.