IMF to start critical review of Pakistan economy to decide further action

Tuesday, March 1, 2011

WASHINGTON - Pakistan’s financial managers and the International Monetary Fund (IMF) mission are set to start the much-awaited fifth review of the economy on Tuesday (today), upon whose successful completion Pakistan would receive 3.6 billion dollars- the remaining portion of the 11.3-billion-dollar Stand-By-Arrangement (SBA).

The IMF mission is expected to conclude its talks with the Pakistani authorities by March 9, the Daily Times reports.

The talks cover areas including tax reforms, Flood Income Tax Surcharge, increase in Special Excise Duty and next year’s budget proposals.

According to official sources, the country’s economic managers will brief the IMF mission on “major factors which put the economy in deep trouble”, including the limited external inflow of 46 billion rupees in the first half of the year, as against the total expectation of 185 billion rupees for the entire fiscal year.

“Less than expected external inflows impacted the budget as well as development in the country,” they added.

The second and the key factor that 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.

In addition to the discussions on fiscal and macro-economic framework, the sources said, the recovery of the cost of power from consumers through the elimination of subsidies, an increase in POL prices and an increase in tax revenues would be a critical part of the Pak-IMF talks.

The sources revealed that upon completion of its review, the IMF mission will report to its executive board and recommend further action regarding approval of the remaining portion of 11.3-billion-dollar IMF loan or its suspension till its key performance benchmarks are met. (ANI)

will not be displayed