IMF says Pakistan's 'reform programme on track', approves $452m second tranche.

ISLAMABAD -- The International Monetary Fund (IMF) approved Pakistan's second tranche of $452 million under the $6 billion Extended Fund Facility (EFF), and said Pakistan's programme was on track and had started to bear fruit, but warned that risks remain.

The approval came after the Executive Board of IMF completed the first review of Pakistan's economic performance under the EFF, said a press release issued by the lender.

The completion of the review will allow the authorities to draw about US$ 452.4 million, bringing total disbursements to about US$ 1,440 million, said the fund.

The IMF Executive Board on July 3 had approved a three-year bailout package worth $6 billion to Pakistan. Soon after the agreement was signed, Pakistan had received the first tranche of loan of $991.4 million from the fund.

Following the Executive Board's decision, First Deputy Managing Director and Acting Chair David Lipton, in a statement, said that the country's EFF programme was on track and had started to bear fruit, but warned that risks remain.

Lipton also called for strong ownership and steadfast reform implementation which he termed were 'critical to entrench macroeconomic stability and support robust and balanced growth'.

'The authorities are committed to sustaining the progress on fiscal adjustment to place debt on a downward path,' said Lipton. The official said that the planned reforms that Pakistan will take includes 'strengthening tax revenue mobilisation, including the elimination of tax exemptions and loopholes, and prudent expenditure policies.'

The first deputy managing director of the fund also called for the preparations for a 'comprehensive tax policy reform' to start early to ensure timely implementation. He added that 'enhanced social safety nets' will help improve social costs and build support for reforms.

Lipton said that 'flexible, market-determined exchange rate' remains essential to cushion the economy against 'external shocks and rebuild reserve buffers'. He added that the 'current monetary stance was appropriately tight and should only be eased once disinflation is firmly entrenched'.

The first deputy...