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Thursday, June 20, 2013
Fresh IMF loan to be front-loadedBy Sajid Chaudhry
ISLAMABAD: The International Monetary Fund (IMF) fresh loan programme will be front-loaded and the government will be required to implement all the conditionalities before approaching the IMF Board for its approval.
The actions that the government would be required to take before making a formal request to IMF Executive Board for fresh loan programme are expected to be brought to the notice of Pakistan’s economic team during the next three days, official sources informed on Wednesday. Sources added that the IMF mission led by Middle Eastern Region Director Geoffrey Frank termed the federal budget realistic and said it apparently reflected IMF priorities enabling Pakistan to meet its economic challenges.
The IMF mission started Post-Programme Monitoring review of Pakistan’s economy. The representatives of the World Bank and Asian Development Bank (ADB) were also present on the occasion. Pakistan’s economic managers led by Federal Minister for Finance Muhammad Ishaq Dar and Federal Minister for Planning and Development Ahsan Iqbal briefed the mission on budget priorities.
According to the meeting schedule agreed, IMF mission will reach Lahore today (Thursday) where it is expected to meet government of Punjab officials and private sector representatives tomorrow (Friday). The IMF mission would reach Karachi to hold formal discussions with the State Bank of Pakistan and private sector representatives of the industrial city. On return of the mission to Islamabad, serious discussions would be held on Pakistan’s fiscal policy and proposed energy policy.
Around three sessions would be held on the proposed energy policy alone which will include discussions on 60% increase in power tariff and adjustment of exchange rate according to the market, and the depreciation of Pak rupee to at least Rs 110 per US dollar is expected to be debated. The official sources said that the further depreciation of Pak rupee is useless as Pakistan’s exports have not benefited from such depreciations during the last many years.
The IMF mission was also briefed on salient features of the proposed energy policy to be announced by Prime Minister Nawaz Sharif with major initiative of clearance of circular debt of Rs 503 billion by July 31.
Sources said that the average power tariff is Rs 8.88 per unit and there is a difference of Rs 6 per unit that needs to be adjusted in the tariff. The federal government has allocated funds for power subsidy in the federal budget that would be enough to subsidise the tariff by 20% and remaining 40% increase in power tariff schedule is to be decided with the World Bank and Asian Development Bank representative part of the IMF negotiating team.
Official sources conformed that the first three days of talks with the IMF mission would cover each sector of the economy. On the opening day short- and medium-term budgetary framework was presented before the IMF mission, which appreciated converting subsidies into targeted subsidies, expansion in social safety nets, enhancing of GDP growth and reduction in budget deficit to a manageable limit of 4% from existing 8.8% for the outgoing fiscal year 2013-14. Federal Minister for Planning and Development Ahsan Iqbal also briefed the IMF mission on Rs 1.155 trillion national development programme, including Rs 540 billion Federal Public Sector Development Programme (PSDP). The IMF mission appreciated increase in development spending, sources added.
Courtesy www.dailytimes.com.pk