IMF REVIEW MISSION IN ISLAMABAD

 

Pakistan has indicated that it will not seek another loan from IMF under PRGF

From SHAMIM AHMED RIZVI,
 Islamabad

Sep 15 - 21, 2003

The 6th review mission of the IMF competed its task giving a certificate of satisfactory economic health thereby paving way of the release of remaining two tranches of the ongoing $1.47 billion Poverty Reduction and Growth Facility (PRGF) programme ending in November 2004.Reportedly Pakistan has indicated to the review mission that it will not seek another loan from IMF under PRGF. For the release of remaining two installments, Pakistan has sought 3 waivers from the donors to which they have positively responded. The final decision will, however be taken by the IMF board meeting next month. The waiver sought, it is reliability learnt, related to upward revision of power tariff, delay in privatization of Habib Bank Ltd which was scheduled to be completed before the arrival of review mission and the delay in preparation of poverty reduction strategy as per guidelines of the IMF.

The Executive Director IMF, Abbas Mirakhor Lauded Government of Pakistan for macro-economic stability. In a meeting with Finance Minister Shaukat Aziz in Islamabad, he observed, Pakistan's achievements in bringing substantive changes to improve its macro-economic situation within a relatively short span of time are worth mentioning.He said that Pakistan has a huge potential profile and needed to increase its GDP growth form present five per cent to atleast 7 per cent to cause a meaningful dent in the poverty level. Mirakhor was of the view that if Pakistan stayed the course of reforms it was poised to achieve even higher growth trajectory to fully tap its economic resources. He said that he was pleased that the economic management of the country had political support and the process of continuity was visible on the radar screen.

He said that these gains could be further consolidated if Pakistan remains on the path of economic reforms and restructuring. He underlined the need for continued reforms path and said that Pakistan achieved economic stability due to macro-economic policies and reforms and not due to benefits of 9/11.He said that strict adherence to agenda, which included financial and institutional reforms, Pakistan's gross foreign exchange reserves had crossed eleven billion dollars, inflation was low, balance of payment was healthy and the deficit was within manageable level. Abbas further complimented Pakistan for keeping the fiscal deficit at four per cent of GDP.

He said this signals mature political will translating into economic management. As a result of these achievements, Mirakhor added, Pakistan has achieved international credibility. He further said that Pakistan was posed to play an important economic role in the development of the region including Afghanistan and Central Asia. However, he emphasized that Pakistan needs to market aggressively to attract attention of international investors, fund managers and other stakeholders to look to Pakistan as an attractive investment destination.

Shaukat Aziz said that economic growth was necessary to generate economic activity and to pass on the benefits to the people. He appreciated constructive and professional role of the IMF in helping Pakistan's transition from crisis management to opportunity and growth management.He hoped that the IMF would continue its professional advice to enable Pakistan to achieve higher growth trajectory Pakistan expected to achieve the growth of 5.3 per cent in the current financial year and was planning to increase it into 6 per cent in two to three years, he added.

The Finance Minister said that process of reforms would continue and Pakistan cannot be complacent as a lot more needs to be done. Pakistan has many challenges like increasing growth improving infrastructure creating jobs and producing better health, education and social services. Pakistan would continue consultations with the International Monetary Fund (IMF) under Article-IV but it would not seek further economic assistance unless the IMF comes up with some concrete suggestions, Shaukat Aziz indicated to the review mission. He, however, asked the IMF executive director to give suggestions to formulate a strategy as to how to consolidate further the economic gains

The sources said the review mission was satisfied with the performance of the government during the last fiscal year and had a soft approach even on some lapses in the power sector. A WAPDA officials said the IMF was told that WAPDA had reservations over some assumption of the finance ministry in the preparation of revised Financial Improvement Plan (FIP) and that slippages on line losses was due to reduction in investment to the tune of Rs.2.5 billion.An official said six out of eight distribution companies of WAPDA has achieved line losses reduction target while Hyderabad and Peshawar electric supply companies fell short of target by 1.9 per cent and four per cent, respectively.