ISLAMABAD/KARACHI – Pakistan has assured the International Monetary Fund (IMF) that it would implement the policy measures for reforms during the nine-month extension in the standby arrangement programme in order to achieve the budget deficit target of 4.7 percent of the GDP.
This was revealed by the IMF in its report prepared by its staff after concluding the December 17 negotiations with Islamabad on the state of economic developments and policies in Pakistan.
A letter written by the Finance Minister Abdul Hafeez Shaikh and State Bank of Pakistan (SBP) Governor Shahid Kardar on December 17 to IMF Managing Director Dominique Strauss-Kahn had requested extension in SBA for a further nine months, to enable the country to implement the policy measures envisaged under reforms programme and to allow sufficient time to complete the remaining fifth and sixth reviews under the programme.
IMF staff expects to conduct discussions for the fifth review in early 2011 with a view to presenting to the board a request for the completion of the fifth review before the end of June 2011, at which time, the staff will propose a set of performance criteria and structural benchmarks that would form the basis for the sixth and final review under the SBA. The IMF is discussing ways with local authorities to achieve Islamabad’s revised 2010-11 budget deficit target of 4.7 percent while accommodating the flood-related assistance. According to the IMF report, the two sides were also discussing Pakistan’s progress in the energy sector reforms, which the IM believes were needed to increase electricity output, curtail the lingering circular debt issue and contain the untargeted electricity subsidies.
According to the report, the IMF would be presenting to the board a request for the completion of the fifth review before June end 2011.
4.7% fiscal deficit to be achieved, IMF told
