After a dismal performance that includes nearly missing all the key economic targets during the outgoing fiscal year, the government is still hopeful that it would manage the revival of its $11.3 billion programme with the International Monetary Fund (IMF), which would pave the way for the much sought after Letter of Comfort from the fund, allowing foreign cash inflows from other donors.
Finance Ministry Spokesman Rana Assad Amin told reporters on Tuesday that the government had already met the key conditions of the fund related to the Reformed General Sales Tax and power sector reforms. He said measures were taken in March to end tax exemptions and the power tariff was raised and power reforms plan was ready. “We are hopeful that they will endorse our macroeconomic framework,” he said.
The IMF mission is expected to hold a full review of Pakistan’s economy in July. The government would be ready for review after July 10, by which time it estimates the complete data for the current fiscal year would have been compiled. The programme was suspended in May 2010 after the government’s failure to implement the agreed tax and power sectors reforms. Amin said that the IMF was in the loop on Pakistan’s economic progress and hopefully it would be endorsing the macroeconomic framework, which would allow the release of the next tranche of $1.6 billion.
The IMF endorsement would also help in getting the Letter of Comfort, which would enable inflows from other donors, he said. He said in order to meet the urgent humanitarian needs of the 1.6 million flood-affected people, the government had slashed the public sector development programme by Rs 100 billion and taken other austerity measures that resulted in savings of Rs 187 billion during the current fiscal year.
