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IMF will provide $510 million aid tranche to Pakistan

world Updated: May 12, 2016 23:46 IST

Visitors are silhouetted against the logo of the International Monetary Fund at the main venue for the IMF and World Bank annual meeting in Tokyo in 2012. (Reuters)

The International Monetary Fund has reviewed Pakistan’s economic performance and will make available a further $510 million to the country as part of a three-year, $6.7 billion financial assistance programme, it said on Thursday.

The money will be provided when the review is approved by the IMF’s management and executive board, the Fund said in a statement, describing its discussions with Pakistan as “productive” and adding that performance criteria in the programme had been met.

Pakistan’s gross domestic product is projected to grow 4.5% in the 2015/16 fiscal year ending this June, and 4.7 percent in the following year, the IMF said.

“Growth remains robust despite a weak cotton harvest and declining exports amid a more challenging global environment,” it said, citing benign oil prices, rising investment including projects linked to trade with China, improvements in energy supply, strong construction activity and faster credit growth.

Discussions with Pakistan on the twelfth and last review under the IMF programme are tentatively planned for August, the fund said.

Pakistan has not requested further funds from the IMF, mission chief Harald Finger told Reuters on the sidelines of a news conference in Dubai.

His organisation had earlier expressed its frustration at the slow progress of a privatisation programme that was slated to lead to the sell-off of 68 state-run companies and be a major element of the IMF package.

Pakistan this year shelved plans to privatise its power supply companies and opted to convert cash-strapped Pakistan International Airlines (PIA) into a limited company instead.

But finance minister Ishaq Dar defended Pakistan’s record, citing the sale of state stakes in some banks including United Bank Limited (UBL) and Habib Bank (HBL) and “certain other divestments”

“There has been a little hiccup in items like PIA, but now we have reformed and that whole process is going to be different,” said Dar, adding the government would fast-track the sale of other state assets including Kot Addu Power Co (Kapco) and Mari Petroleum.

“It was a selective menu, some items on the menu have been replaced. We have to reduce the losses that are bleeding the economy and we have been able to do that.”

He said Pakistan’s economic growth would be 5 percent this year.

“Next year we are estimating even more ambitious targets of about 6.0 percent growth,” he added. “This country has the potential to hit 7.0% GDP growth.”