ISLAMABAD – The International Monetary Fund (IMF) on Monday categorically conditioned its support to Pakistan with immediate measures to implement economic reforms to control the rising fiscal deficit and inflation, as the government asked for at least one more tranche of the $11.3 billion stand-by arrangement.
The IMF team, consisting of the Mission Chief for Pakistan Adnan Mazarei and Director Middle East and Central Asia Department Masood Ahmed, and Resident Representative Paul Ross spent a busy day meeting with President Asif Ali Zardari, Prime Minister Syed Yousuf Raza Gilani and Finance Minister Dr Abdul Hafeez Shaikh.
The IMF team was apprised of the progress on the government’s talks with the parliamentary political parties on the economic reforms, plans on restructuring public sector entities and power sector reforms, and that all these reforms would be completed within the current financial year. The government wanted IMF team to agree to an immediate review of the economic progress to get at least one more tranche of $1.7 billion of the $ 11.3 billion stand-by arrangement, suspended till May last year.
The government hoped for a waiver, as the fiscal deficit had been maintained at 2.9 percent of GDP for the first half of the current fiscal year. IMF team, the source said, was quite categorical in its demands and urged immediate implementation on the economic reforms, imposition of Reformed General Sales Tax and elimination of electricity and petroleum subsidies, without which sustainable management of the ballooning fiscal deficit and inflation was not possible.
The government side said power tariff would be raised by 20 percent during the remaining period of the current fiscal year, to completely end the power tariff differential subsidy. The IMF team was considerate on the dialogue progress with the political parties for consensus on the economic reforms but categorically stated that no review was possible without their implementation. The IMF team will hold talks with the Punjab government on Tuesday.
The PM said the Senate had already passed RGST and intensive consultations were being held with the major political parties to build national consensus for it to be passed by the National Assembly.
