News
Wednesday, June 19, 2013
Govt to reject tariff raise condition for fresh IMF loan* Islamabad to get $3bn to $5bn fresh loan if two sides agree on terms
Staff Report
ISLAMABAD: The government has decided not to accept the condition of quarterly increases in power and gas tariffs to qualify for a fresh International Monetary Fund (IMF) loan programme during the six-day talks with the international lending agency starting today (Wednesday).
Pakistan and IMF are set to start six-month review of the country’s economy under the Post Programme Monitoring (PPM) on Wednesday. The IMF mission was to arrive in the federal capital late Tuesday night. Pakistan had earlier refused to hold PPM review in Dubai and Abu Dhabi on the request of the IMF and had insisted on holding the review meeting in Islamabad.
Official sources at the Finance Ministry said on Tuesday that the PPM review would last for five days and talks on fresh IMF loan programme will be held on the sixth and final day. Official sources said that Pakistan needs foreign inflows at affordable programme conditionalities and in case IMF demanded increase in power and gas tariffs on a quarterly basis it would not be acceptable for the government.
In case the terms of fresh loan programme with IMF are favourable then $3 billion to $5 billion fresh loan programme would be agreed with a repayment period of up to ten years, sources added. But if the terms of fresh loan programme are not favourable, then the government will not go for it and instead rely on foreign inflows that have been budgeted i.e. $1.2 billion from auction of 3G licences, realisation of $800 million from PTCL privatisation proceeds from Etisalat and realisation of arrears of Coalition Support Fund (CSF) from United States.
The government is expecting $3 billion foreign inflows from these three heads which would be enough for the repayment of $3 billion Stand-By-Arrangement loan during the fiscal year 2013-14. The sources added that realisation of these foreign inflows would help maintain foreign exchange reserves at present level and there would be no more pressure on Pak Rupee.
However, reforms for gradual resource mobilisation, better expenditure management for reduction in budget deficit, containing bank and non-bank borrowing, strict observance of austerity and limiting of debt in accordance with Fiscal Responsibility and Debt Limitation Act (FBR&L) are expected to be the priority areas. The present government has already developed and started implementing an economic road map, aiming to bring fiscal deficit down to 6.3% from 8.8% in the ongoing fiscal year, 5% in next year and achieving 4% sustainable limit of fiscal deficit by third fiscal year.
Courtesy www.dailytimes.com.pk