Karachi: The International Monetary Fund Thursday praised Pakistan and noted initial success in stabilising its crisis-hit economy, in the first review of a $7.6 billion line of credit.
“The (IMF’s) mission is impressed by authorities’ strong resolve to sustain prudent macroeconomic policies, strengthen and broaden the social safety net, and pursue reforms to enhance medium-term growth prospects,” it said.
“The resolve of the Pakistani authorities, as well as the initial success in stabilizing the economy, augurs well for the future, despite the risks associated with the deterioration in the global economy,” it added.
The statement followed 12 days of talks between Pakistani officials and creditors to review a 7.6 billion loan which the IMF approved last year in a rescue package as Pakistan sought to head off a balance of payments crisis.
During the talks, in Dubai and Islamabad, Pakistani and IMF officials assessed financial targets for the country to qualify for a second installment of the loan, a finance ministry official said.
Pakistan got $3.1 billion in the first tranche of a 23-month standby IMF loan last November, with subsequent payments dependent on Islamabad fulfilling targets set by the IMF.
Finance ministry officials said Pakistan had also requested an additional loan of $4.5 billion from the IMF.
“Initial developments since the approval of Pakistan’s IMF-supported program have been generally positive, and all the program’s quantitative performance criteria for end-December 2008 were observed,” the IMF said.
The exchange rate had remained broadly stable and Pakistan’s international reserves position has strengthened significantly, it added.
The central State Bank’s gross foreign exchange reserves exceeded $6.8 billion at end-January, excluding reserves of commercial banks.
The IMF wants a reduction in Pakistan’s deficit and its huge borrowing from the central State Bank of Pakistan.
Pakistan’s economic growth is expected to fall to between 3.5% and 4.5% this fiscal year, the central bank recently said.
Pakistan’s precarious financial situation had caused worldwide alarm due to its role as a key ally in the US-led “war on terror” and its position as the world’s only nuclear-armed Islamic power.