News
Tuesday, March 01, 2011
IMF to start fifth review of Pakistan economy today
* Talks to include discussions on fiscal framework, increase in oil prices, tax revenues
* IMF mission to recommend action on suspension of remaining loan to executive board
Staff Report
ISLAMABAD: The country’s economic managers and the International Monetary Fund (IMF) mission are set to start the much-awaited fifth review of the economy today (Tuesday), upon the successful completion of which Pakistan would receive $3.6 billion, the remaining portion of the $11.3 billion Stand-By-Arrangement (SBA).
The IMF mission is expected to conclude its talks with the Pakistani authorities by March 9. Talks cover areas like tax reforms, including RGST, Flood Income Tax Surcharge, increase in Special Excise Duty and next years’ budget proposals.
According to official sources, the country’s economic managers are to brief the IMF mission on “major factors which put the economy in deep trouble”, including the limited external inflow of Rs 46 billion in the first half of the year, as against the total expectation of Rs 185 billion for the entire fiscal year. “Less than expected external inflows impacted the budget as well as development in the country,” said the sources.
The second and the key factor, which adversely affected the economy, were the floods, which not only badly impacted the economic activity but also resulted in additional expenditures, which were a constraint on the already tight fiscal situation, said the sources.
In addition to discussions on fiscal and macro-economic framework, the recovery of the cost of power from consumers through elimination of subsidies, passing on to the consumers increase in oil prices in the international market through increase in POL prices and increase in tax revenues would be a critical part of the Pak-IMF talks, the sources said.
Executive: The sources informed that the IMF mission, upon completion of its review, will report to its executive board and recommend further action regarding approval of the remaining portion of $11.3 billion IMF loan or its suspension till its key performance benchmarks decided beforehand are met.
Courtesy www.dailytimes.com.pk