The IMF mission which came to Pakistan last week to
conduct a review of economy before release of the next tranche under
Poverty Reduction and Growth Facility (PRGF) programme felt highly
satisfied after its meeting with the President and the Prime Minister,
Mir Zafarullah Khan Jamali in Islamabad.
It is now almost certain that the 5th tranche of 114
million US dollars will be released by next month after its formal
approval by the IMF Board of Directors.
A high profile team of IMF headed by George Abed,
Director Middle East Department of Fund arrived in Islamabad on Friday
last to hold talks with the Prime Minister and his economic team on the
future direction of reforms, shape of PRGF programme and seek commitment
to carry out agreed structural measures with all the International
Financial Institutions. Before meeting the Prime Minister, the Country
Chief of Fund in Islamabad had indicated that IMF wanted an assurance
for continuity of reforms from the civilian head of the government.
"Outcome of the talks with the Prime Minister would determine the
schedule of the next executive board meeting", he said adding that
"the team would discuss the future strategy of the political
authorities and would listen how they want to move forward".
Addressing a joint press conference with PM's Advisor
on Finance, the IMF mission head said that they were fully satisfied
with the assurances provided by the President and the Prime Minister and
his economic team regarding continuity of reforms. The IMF board will
meet next month to consider the release of 5th tranche under the PRGF.
He said that the Fund was pleased to see the 3-year economic performance
of the country and the firm resolve of the elected government to carry
out structural reforms to consolidate the gains and improve the life of
In December 2001, the IMF had approved a 3-year PRGF
programme of about $1.5 billion for Pakistan and the country has already
drawn $454 million. The next tranche of about 114 million was due in
January but got delayed due to political transition in the country.
During their meeting, the Prime Minister reaffirmed
commitment to follow the IMF calls or adhering to agreed reform agenda.
"We believe in continuity of reforms", said Prime Minister Mir
Zafarullah Khan Jamali. "We will make efforts to create employment
opportunities through promoting higher investment and growth", he
The Prime Minister underscored the need for
continuation of consistent and transparent economic policies, completion
of the on-going structural reforms, better law and order, and stressed
to remain financially responsible, according to an official handout.
Jamali said the government would build upon the foundation laid by the
previous regime, and would strive for higher economic growth, so that
the fruits of development could trickle down to common man.
George Abed, on is first visit to Pakistan after
replacing Paul Chabrier, is a Palestinian and Jordanian national, and
had also worked in the fiscal policy department of the Fund.
"If Pakistan continues to stay on path of
reforms, it would further stabilize macro-economic stability, increase
growth rate, which in turn would generate economic activity and help
reduce poverty", he said.
The IMF mission chief, however, pointed out that
there were many difficulties and challenges ahead, like in the power
sector, where Wapda and KESC needs major reforms, and necessary
environment to ensure their privatization. The government, he said, was
still constrained by high poverty rate, as it was still a poor country
needing to develop. "We and the authorities know we have not done
He said the government would not be able to reach the
target of Rs.161 billion poverty-related expenditures this year. But the
government was determined to get as close to that target as possible, so
that the benefits of the government spending reach the poorest of the
poor. He, however, acknowledged comparatively higher allocations for
poverty alleviation efforts this year.
Abed supported higher spending, within the agreed
fiscal limits, on pro-poor social sector projects, including education
and health, and endorsed the Prime Minister's welfare scheme of Rs. 5
billion, as a social safety net for the poor and vulnerable segments of
He, however, suggested that the role of the national
saving organizations should be reformed and modernized, separating its
social security aspects, from that of a saving organization. He
recommended broad-based reforms in the structuring and design of various
products to make them consistent with the overall direction of reforms.
He, however, was not averse to the cushion provided to the pensioners.
George Abed underscored the need for maintaining
fiscal discipline, as it would help reduce the debt levels, and attain
sustainable and higher growth rate of 6 per cent in the next few years.
In this regard, he emphasized that all relief efforts should stay within
the available fiscal room. The government had reassured the fund to keep
the budget deficit at the agreed limit of around 4.67 per cent of the