ISLAMABAD – Pakistan will have to move fast on the reforms process after the approval of the nine-month extension of $11.3 billion Stand-By Arrangement programme by the International Monetary Fund (IMF), a senior official of the Ministry of Finance said on Tuesday.
He said the IMF had only given an extension in the programme but the release of the remaining amount of $3.6 billion would depend on the completion of the fifth review, which would be held only after the implementation of the agreed reform process with IMF.
The official said that immediate steps were required to continue with the programme which he admitted had been suspended since May. The statement issued by the IMF said the extension which is until September 30, 2011 would give Pakistani authorities time to complete the reform of the general sales tax, implement measures to correct the course of fiscal policy, and amend the legislative framework for the financial sector.
He said the government was considering removing all existing general sales tax exemptions and zero ratings through the notification of Statutory Regulation Order by the Federal Board of Revenue (FBR) effective from January 1, 2011. He said an IMF team was coming in the next few days and would be taken into confidence on the new plan of action.
One of the major concerns of the IMF was curtailing the fiscal deficit, which was estimated at over three percent of the GDP during the first six months of the current fiscal year. It was to be retained at 2.3 percent during the first half of the current financial year.
The government had assured nil borrowing from the central bank during this fiscal year. However, it had borrowed Rs 328 billion until the mid December. The Finance Ministry official said half of the expenditure was necessary considering the floods but the other half could have been controlled.
