ISLAMABAD (Agencies) - The International Monetary Fund (IMF) has agreed to approve a second tranche of 800 million dollars of its 7.6-billon-dollar programme to save Pakistan from defaulting on external payments, a senior official said on Wednesday. "The Executive Board of the IMF will approve the second tranche for Pakistan by the end of March 2009," Pakistan's Finance Secretary Waqar Masood told German news agency DPA from Dubai, where the sides concluded the talks. The two teams agreed on all major macroeconomic targets for the fiscal year ending on June 30 as they reviewed financial targets set for the country to qualify for the second tranche of the IMF mission's loan approved in November 2008. The organisation said the country was on track to comply with its economic programme. But, it warned, 'the deterioration in the global economic environment and weaker economic activity call for an update of the economic framework and a recalibration of economic policies.' A senior Pakistani official privy to the talks who spoke on condition of anonymity said that the country's Gross Domestic Product (GDP) target had been revised downward from 3.5 per cent to 2.5 per cent for the ongoing fiscal year, as suggested by the IMF. Officials from the world organisation and Pakistan also agreed to envisage GDP growth target of 4 per cent for the next 2009-2010 budget. State Bank would decrease discount rates by March if the policy core inflation was brought down. Otherwise, tight monetary policy would continue in the remaining period of the ongoing fiscal year, said the official sources. Meanwhile, Pakistan's monetary policy is appropriate but there would be room to lower interest rates if inflation declined, the International Monetary Fund said in Washington on Wednesday. In a statement following a 12-day staff mission to review a $7.6 billion stand-by lending programme, the IMF said it was 'impressed' by Pakistan's resolve to sustain prudent policies, strengthen the social safety net and pursue reform. But it also said the global economic turmoil was taking a toll on Pakistan's economy, hurting demand for exports and curbing remittances from workers abroad, so economic policies needed to be recalibrated. The IMF said Pakistan's current monetary policy stance was 'appropriate and will continue to promote domestic and external stability'. "Looking ahead ... if both headline and core inflation decline, there should be scope for lower rates," the IMF said.