The government has decided not to seek a new programme from the International Monetary Fund (IMF) until it puts its house in order by improving revenue collection, reforming the power sector and eliminating untargeted subsidies. However it would maintain its engagement with the fund for seeking any assistance in future. Official sources said the finance team would talk with IMF officials on the sidelines of the upcoming meeting of World Bank and IMF on September 23-25 in Washington.
Finance Minister Dr Abdul Hafeez Shaikh is expected to leave for Washington on Sunday. He said the decision was made considering the performance of the Federal Board of
Revenue (FBR) which was under immense pressure due to the volatile law and order situation for the last two months in the country’s industrial hub and coastal city of Karachi. The slow pace of the power sector reforms would make a difficult case for a softer IMF programme. Revenue and power sector reforms were the main agenda items of the $11.3 billion IMF programme concluded in 2008 but suspended since May 2010 due to the failure to implement the agreed reforms. The programme expires on September 30 after 9 months of extension granted in December last year. The government was earlier expected to pitch for a new programme with IMF during September talks and preparations were underway but the Karachi situation, untimely rains in Sindh needed a revision in the economic targets, which could not be properly estimated on urgent basis. The best possible option was to keep IMF engaged and seek a new programme when situation improved, he added. Despite the difficulties the government has decided not to revise the revenue target as it would lead to major changes in other budgetary items. FBR was advised to maintain its proactive approach to generate more revenue, the source said adding that in the meanwhile the government would continue pursuing the proposed power sector reforms to bring the country out of quagmire.
