Even though the government has decided not to waste energy on reviving the suspended $11.3 billion standby arrangement facility or pursue the International Monetary Fund (IMF) for a new bailout package, a mission of the Fund is expected to visit Pakistan in October this year to hold review of the economy.
An official source at the Finance Ministry said the IMF mission would be reviewing the economy, which was mandatory under the Article IV for every member country of the Fund. The review is already overdue as it was to take place in March this year. Confirming the development, Finance Minister Hafeez Shaikh said the IMF mission would be coming in October but the dates of the visit had not been finalised yet.
He said Pakistan would be presenting its assessment of the economy while the Fund officials would make their own assessment. He conceded that the suspension of the IMF programme had halted inflow from the World Bank and the Asian Development Bank linked with the programme but said those funds alone would remain suspended until a new programme was not concluded with the Fund.
The source said the government had progressed well on the agreed revenue and power sector reforms with the Fund, adding that it was decided not to seek revival of the suspended programme or pitch for a new programme during the upcoming talks with the IMF on September 23 to 25 in Washington. Pakistan was faced with a difficult situation as it had not managed to implement the agreed Value Added Tax in an integrated manner and the progress on power sector reforms had remained dismal.
Since the government managed foreign exchange earnings of $37 billion — $25 billion in exports and $12 billion remittances – in the last fiscal year, it was of the view that it could suitably manage the economy until June 2012. About the repayment of the IMF loan, he said a total of $1.2 billion had to be repaid in the current fiscal year, adding that it would be repaid in two installments of $790 million and $570 million.
He said the repayment of loan to Paris Club countries was already budgeted, adding that the government’s conservative estimate project an increase of five percent in the external account that would enable the country to survive without the IMF. “We will be reasonably comfortable on the external front during the current fiscal year”.
