News
Tuesday, March 08, 2011
Pakistan may enter into another IMF loan programme* Enforcement of RGST, other tough tax measures will be performance benchmarks of new IMF loan programme
By Sajid Chaudhry
ISLAMABAD: The government is likely to enter into another International Monetary Fund (IMF) loan programme by completing fifth review of the $11.3 billion Standby Arrangement (SBA) in June 2011, official sources said on Monday.
Enforcement of the reformed general sales tax (RGST), other tough tax and expenditure measures by July 1, would be the performance benchmarks of the new IMF loan programme, the sources said. They said that during the ongoing talks with an IMF mission, the priority of Pakistan’s economic managers was to have some benchmark targets for end-March to complete the fifth review.
The IMF mission would visit Pakistan again in May this year to assess implementation of the performance benchmarks, which are being negotiated at present.
A successful completion of talks in May would help the IMF approach its executive board in early June for the release of $1.7 billion tranche out of the remaining $3.6 billion of the $11.3 billion SBA, and restoration of issuance of a letter of comfort for fresh financing from the World Bank (WB) and Asian Development Bank (ADB).
If Pakistan remained successful in completing the fifth review in May, the economic managers might request another IMF loan programme in the beginning of the next fiscal year 2011-12 without demanding the $1.7 billion last tranche of the $11.3 billion SBA, the sources said, adding that the last tranche would be pegged with the next programme and considered as repayment of the loan.
An official said that primary concern of the economic managers was to qualify for the fund letter of comfort and release of $1.5 billion stalled budgetary assistance from the WB, ADB and United States.
According to the official, the Public Sector Development Programme’s (PSDP) size was reduced to Rs 180 billion from initial projection of Rs 280 billion for the current fiscal year due to financial deficit. He, however, added that the PSDP’s size might reach Rs 200 billion mark by the end of the fiscal year due to the essential payments.
Official sources said that the PSDP 2011-12 might not cross Rs 250 billion mark due to constraints as other financial obligations might not enable the government to allocate huge amount for development in the next year’s budget. They also confirmed that external funding of the PSDP was relatively low.
It is the standing order that PSDP releases may not be allowed to cross the 65 percent of the allocated amount of the project until March 31. The total utilisation of the PSDP was only Rs 88 billion in the first eight months and Rs 66 billion in the first six months of the current fiscal year.
Another official said that majority of projects were non-operational because of the squeeze in release of funds. He further said that revenue collection was affected by the delay in imposition of the RGST, the floods, delay in imposition of flood income tax surcharge and increase in special excise duty.
Courtesy www.dailytimes.com.pk