News
Sunday, March 27, 2011
Govt decides to go for fresh IMF loan programme
* Economic managers examining three options for negotiations
* Suitable cost of borrowing to be decisive factor for deal with IMF
* Pakistan may issue sovereign bonds for repayment to IMF
By Sajid Chaudhry
ISLAMABAD: The government has decided in principle to go for a fresh International Monetary Fund (IMF) loan programme and economic managers are examining three options for negotiations, while suitable cost of borrowing would be the decisive factor for reaching an agreement with the IMF, official sources informed Daily Times on Saturday.
Sources explained that Pakistan would also keep an option of issuance of sovereign bonds in the international market open for the repayment of IMF, in case terms of the IMF loan programme were found difficult to meet.
They added that at present the government was negotiating bridge financing that would be for a transition between the ongoing $11.3 billion Stand-By-Arrangement to a fresh
loan programme.“New IMF loan programme is a must,” while explaining three options available to the government for going for a new IMF loan programme, the official sources told this scribe that to allow the existing IMF loan programme to continue for another term, merge the existing programme into a fresh loan or allow the existing programme to complete and then go for a fresh
loan programme.“Giving a positive signal to the local and foreign investors is needed at this point in time and it depends how the government moves from the existing programme to a fresh loan programme,” sources elaborated.
They added that IMF authorities believed that the measures taken by the government on Rs 120 billion expenditure cut and Rs 53 billion fresh taxation, along with Rs 37 billion administrative measures for revenue generation, were one-time measures. “We have not been able to hand over some thing concrete that could help IMF authorities themselves on Pakistan’s resource mobilisation efforts,” they said, adding, “We will be required to increase our efforts for domestic resource mobilisation in order to meet not only the loan repayment obligation, but also the security and development needs of the country.”
IMF authorities are more interested in measures that are necessary for resource mobilisation on permanent basis, especially in years when the country is going to repay the IMF loan.
“IMF wants us to improve domestic resource mobilisation so as to create a fiscal space for loan repayment as well as meet development goals of the country,” said the sources.
The sources said that the present state of relations with IMF authorities were the consequence of commitments Pakistan made to the Fund and failed to honour them. “No one in the economic team is aware about reaction from the major political forces on tax and power sector reforms especially the RGST,” they concluded.
Courtesy www.dailytimes.com.pk