ISLAMABAD: IMF has appreciated the government efforts to comply with the plan of action of Financial Action Task Force (FATF) and said that State Bank’s monetary and exchange rate policies have served Pakistan well and were critical in helping to navigate the COVID-19 shock.
In a statement released after Staff-Level Agreement with the Government, IMF said, “They (Government of Pakistan) continue to enhance the effectiveness of their anti-monetary laundering/counter financing of terrorism (AML/CFT) framework and progress in completing their action plan with the Financial Action Task Force (FATF).
The statement further said, “the State Bank of Pakistan (SBP)’s monetary, and exchange rate policies have served Pakistan well and were critical in helping to navigate the COVID-19 shock. The strengthened international reserves’ position since the start of the program—with gross reserves almost doubling to USD 13 billion until January 2021 and net international reserves (NIR) increasing by over USD 9 billion until December 2020—and the shock absorption displayed by the market-based exchange rate, allowed the SBP’s to pre-emptively proceed to a large easing of monetary policy, and a sizeable expansion of refinancing facilities. The banking system remains healthy, but it will be necessary for the SBP to continue to stay vigilant and prevent possible financial stability stress as the temporary support is phased out. International reserves are set to improve further reflecting current account developments, the EFF resumption, and international partners’ support.
“The authorities are moving steadfastly on a number of other important reforms, including on strengthening regulatory agencies’ legal frameworks (NEPRA and OGRA Acts), consolidating SBP’s autonomy (SBP Act), and improving state-owned enterprises (SOE) management (SOE Law). They have also conducted a triage of SOE and are moving forward with the audits of contracts awarded for COVID-19 related spending.