News
Sunday, July 04, 2010
Pakistan must bring development goals within fiscal envelope: IMF
* IMF advisory says Pakistan’s poverty reduction strategy faces risks such as global financial crisis, law and order situation
By Sajid Chaudhry
ISLAMABAD: The International Monetary Fund (IMF) has urged Pakistan to revise its development and poverty reduction goals keeping in mind its financial position.
The IMF said this in a “Joint Staff Advisory Note” that was issued after it reviewed the Pakistan government’s Poverty Reduction Strategy Paper-II (PRSP).
“In light of Pakistan’s deteriorated fiscal and economic outlook, it will be important to bring the development goals and poverty reduction agenda in line with the available fiscal envelope,” the note stated.
While endorsing PRSP-II, the IMF has stated that the proposal provides a comprehensive framework for Pakistan’s efforts to stabilise the economy and bring it back to a higher growth path.
However, the note cautioned that implementation of PRSP-II faced several risks that need to be managed.
The note has suggested to the government the following priority areas for strengthening the strategy and its implementation: development of a detailed tax policy and tax administration reform action plan to ensure ambitious revenue mobilisation targets; carrying out further work on proposed programmes and measures on health and, if necessary, revising the targets in light of the fiscal constraints; implementation of the envisaged social safety net reform agenda; further development of reform agenda on governance and public financial management; reducing emphasis on directed programmes at small and medium enterprises and strengthening the technical capacity for poverty measurement and analysis.
The IMF advisory states that the implementation of PRSP-II faces several risks that need to be managed. These include a further deterioration in the world economy and international financial markets, which could complicate the stabilisation efforts by weakening Pakistan’s export prospects, lowering capital inflows, limiting economic growth and reducing flexibility for economic reforms.
The deterioration in the security situation is also a risk to the proposal, which could shift the government’s focus away from economic matters.
The government had earlier completed the PRSP-II in December 2008 and then sent it to international monetary institutions for evaluation.
The PRSP-II builds on the first Poverty Reduction Strategy Paper, which was adopted in December 2003. The PRSP-II focuses on regaining macroeconomic stability and the growth momentum of 5 to 7 percent a year, while protecting the poor and vulnerable.
These objectives are supported by the IMF stand-by arrangement and the World Bank’s proposed Poverty Reduction and Economic Support Operation.
Courtesy www.dailytimes.com.pk