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IMF approves Pakistan loan tranche, waives target

Pakistan has a $1.37 billion loan program, designed to reduce poverty and boost growth, which was approved by the fund in December.

"The fund commends the authorities for consolidating gains in macroeconomic stability and progressing with structural reforms in a difficult economic and political environment," IMF Deputy Managing Director Eduardo Aninat said in a statement in Washington.

Pakistan's economy is likely to grow 4.5 percent this year with cautious monetary and exchange rate policies likely to allow for further accumulation of international reserves, he added.

The IMF waived the quarterly revenue target for the period that ended March 31, saying the shortfall in revenue essentially reflected continued lower-than-expected imports in the aftermath of the September 11 attacks in the United States.

Pakistan has been a key US ally in the war on terror. The US is the largest and most influential shareholder of the IMF.

Pakistan has now drawn $343 million from the loan. The last tranche was approved in March and two conditions regarding taxes were waived at that time.

The IMF urged Pakistan to enforce tax collection and continue to make reforms to tax administration.

"The authorities should also stand ready to undertake appropriate corrective fiscal measures, if needed, to achieve the budgetary targets," Aninat said.

He also said the country must forcefully restructure two power utilities - the Water and Power Development Authority (WAPDA) and Karachi Electric Supply Corporation (KESC), to stop the drain on budgetary resources.

Both companies should also be more clearly held accountable for their performance in reducing leakage theft, administrative costs and enforcing bill collections, the IMF said.

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