Pakistan wants continuation of IMF program

ISLAMABAD: The task before the Pakistan’s economic team at Washington is to ensure continuation of IMF programme and successful completion of fifth review during Pak-International Monetary Fund meeting underway at Washington, official sources at Ministry of Finance informed here on Thursday.

IMF authorities extend the existing programme, it would depend on the Pakistan’s assurances that would be extended to the authorities to fund and a positive development would help stabilize the economy.

No matter Pakistan gets single tranche of $1.3 billion or two installments of $2.6 billion after the conclusion of fifth review with IMF, the real task is to make sure that country’s remain in IMF programme, the sources added.

Sources further informed that Pakistan has already missed the main performance benchmarks agreed with IMF under Stand-By-Arrangement and would seek extension for meeting these performance benchmarks in expended period, the sources explained.

Pakistan would seek International Monetary Fund (IMF) willingness to defer the introduction of reformed General Sales Tax (GST) from July 1, 2010 to October 1, 2010 and also deferring of elimination of power tariff subsidies at an agreed time frame.
At present when the country’s major parts are destroyed by the devastating floods it would be much difficult for the government to eliminate the power tariff subsidies and increase the power tariff, added the official sources.

The sources said that the government there is still one month left before the deadline reaches on introduction of reformed GST from October 1, 2010. The sources said that issues relating to reformed GST on services are expected to be resolved before the deadline of October 1, 2010 as technical work has already been completed by the authorities concerned in consultation with main stakeholders like provinces.

Pakistan has also requested the IMF to release at once two remaining tranches of $2.6 billion from the $11.3 billion to create the fiscal space. The authorities anticipate that the IMF may agree to release only $1.3 billion immediately after the ongoing talks.

The government has not been able to eradicate subsidy on electricity by July 1, 2010, as committed to the international lending agencies while zero borrowing limit from the State Bank of Pakistan has been breached by Rs40 billion.

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