IMF confirms board will consider $840m loan tranche

ISLAMABAD: The International Monetary Fund (IMF) has confirmed that the Fund’s Executive Board will consider the approval of a second loan tranche worth $840 million for Pakistan on March 30 under $7.6 billion Standby Arrangement (SBA) programme.According to an announcement made by the IMF, the Executive Board will take up Pakistan’s first review titled ‘2009 Article IV consultation and first review under the standby arrangement’ in its meeting to be held on March 30 at Washington.Pakistan will receive $1.5 billion from the International Monetary Fund (IMF), World Bank (WB) and Asian Development Bank (ADB) by the end of the current month or the first week of April.“The IMF will approve a tranche of $840 million, which will be disbursed to Pakistan within 72 hours,” said a high-level official of the finance ministry while talking to The News on Monday.When Finance Secretary Salman Siddiq was contacted for comments, he said that the IMF would approve $840 million on March 30 and also confirmed that the World Bank would also approve $500 million under the Poverty Reduction and Economic Stabilisation Operation (PRESO) on March 26. “The ADB is also likely to release around $200 million within this month,” he added.However, according to official sources, the IMF tranche worth $840 million will be released in two to three days of the Board’s approval and it will help the country improve its foreign currency reserves. Pakistan’s foreign exchange reserves were over $10 billion last week.Pakistan had successfully met all envisaged targets for the first half (July-Dec 2008) of the ongoing fiscal year which would help it get the second tranche of IMF loan without facing any difficulty.The tightening of monetary as well as fiscal policies has resulted in pressing demands and compromising on growth prospects. Pakistan has already revised its downward gross domestic product (GDP) growth target to 2.5 per cent from the target of 3.4 per cent.Average inflation target was also lowered to 20 per cent from an earlier target of 23 per cent for the current fiscal year. It was also envisaged that inflation will be brought down to 10 per cent by June 2009 compared to the same month last year. Keeping in view reduction in inflation, interest rates will also be brought down before June 2009.Both sides also slashed down FBR’s annual target from Rs1360 billion to Rs1300 billion for the current fiscal year, which is unlikely to be achieved by the end of June 2009. The programme funding of $500 million from the WB under PRESO will help Pakistan improve its budgetary position.The availability of precious foreign inflows from the IMF and ADB were not facing any problem but the programme loan from the WB faced certain bottlenecks in the past and it was the success of the economic managers to convince them for extending programme loans for Islamabad.The WB and ADB high-ups participated during recently concluded talks in Dubai between Pakistan and the IMF as observer and both the IFIs were completely on board with regard to the envisaged targets of the national economy.The WB, sources said, has linked resumption of programme loan with successful implementation of the targets set by the IMF for Pakistan’s economy and the first review talks at Dubai gave a sense of satisfaction to WB authorities as well, paving the way for accomplishing all procedural requirements for approving the PRESO worth $500 million.Sources in the ADB are saying that Pakistan will receive a second tranche worth $500 million under the Accelerating Economic Transformation Programme (AETP) before June 2009 and it will be processed for the Board’s approval by May 2009.