US to be approached for 9-month IMF extension


ISLAMABAD – Pakistan has decided to seek US help to ensure the nine-month extension from the International Monetary Fund (IMF) for its $11.3 billion standby arrangement programme.
The decision to approach the Obama administration has been made after the country’s economic managers decided that without Washington’s influence, it would be a daunting task to get the IMF agree to Islamabad’s request.
“Apart from Washington, Pakistan is also likely to approach other friendly states engaged in the anti-terrorism campaign, but we know that Washington holds the key to an amicable settlement to the contentious issue of the IMF extension,” a senior Pakistani diplomat said on Sunday wishing not to be named.
He said Pakistan was approaching its western allies because all economic problems confronting the country had to do much with its efforts aimed at the eradication of terrorism, especially in the Tribal Areas.
The IMF programme is scheduled to conclude at December end this year and Pakistan has so far received $7.7 billion from the fund, with the remaining $3.6 billion being held back due to the country’s failure to meet IMF benchmarks.
The IMF programme has an inbuilt mechanism for an extension of up to three months, but an extension of another six months was vital for the country’s economy, the economic managers opine, keeping in view the serious nature of problems and difficulties in the implementation of the reformed general sales tax, the diplomat said.
“The IMF is not only demanding the implementation of GST reforms, but also for revenue and power sector reforms along with substantial decrease in borrowing from the central bank as well as a reduction in deficit of state-owned enterprises,” he said.
He said all those issues were not easy to tackle and Pakistan needed time to do that, adding that Islamabad hoped all its allies, including Washington, would help it overcome the financial crunch. Another official confirmed the decision to approach the Obama administration.
He said a deep sense of resentment prevailed among the country’s ruling circles owing to US and other friendly states’ slow response to Pakistan’s economic needs in the aftermath of the devastating floods.
“President Asif Ali Zardari, who is likely to visit Washington early next year, will apprise the Obama administration about this disappointment with a warning that sluggishness on their part could harm the cooperation in anti-terrorism efforts,” he added.