ISLAMABAD: The International Monetary Fund (IMF) on Friday approved the release of $501.4 million to Pakistan and praised the country’s efforts for stabilising the economy and urged the government to continue reforms.

The decision to approve the seventh loan tranche worth $520 million was taken by the Executive Board of the IMF in a meeting held in Washington. The approval was already anticipated, as the government had comfortably met all the conditions set for the period of October-December 2014 period. The IMF Board also approved the sixth review of Pakistan’s economy.

It was for the first time in the last 18 months one and a half year when the country had a smooth sailing in the Executive Board meeting. Unlike in the previous five reviews when the Board had to waiver about a dozen conditions, this time Pakistan did not require any waiver.

The IMF Board approved sixth review for Pakistan’s programme, which will allow the disbursement of $501.4 million, according to the IMF. The lending agency said the total disbursements under programme would now reach to $3.7 billion.

The government had met all the five performance criteria relating to Net International Reserves (NIR) target, Net Domestic Assets target (NDA), reducing general borrowing, reducing borrowings for budgetary support from State Bank of Pakistan (SBP) and fulfilling the condition on debt swap arrangements.

However, in order to meet the target on reducing borrowings from the SBP, the government borrowed over Rs1 trillion from the commercial banks instead of taking it from the central bank during period of July to February. The SBP facilitated the commercial banks in providing loans to the federal government and injected over Rs1 trillion in the banking system. In essence, the banks lent the federal government by borrowing from the SBP.

Germany’s executive director was quoted as saying that he was pleasantly surprised that Pakistan had met all the performance criteria and did not need a waiver.

The executive directors commended Pakistan for attaining all performance criteria and urged the government to continue reforms, said the IMF.

Pakistan and the IMF entered the three-year Extended Fund Facility amounting to $6.6 billion in September 2013 aimed at introducing critical reforms to stabilise economy and avoid default on international payments.

With release of $520 million by next week, the country’s total foreign currency reserves would touch $16.7 billion. The State Bank of Pakistan’s reserves would increase to $11.6 billion.

In June 2012, Pakistan had $15.2 billion in its kitty, before reserves saw a decline due to drying up foreign inflows and the governmen’s move to arrest the rupee’s decline.

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