Pakistan may follow 'shadow programme'

The deteriorating economic fundamentals might force Pakistan to follow the International Monetary Fund (IMF) 'shadow programme' under which the country would follow the IMF policy without taking financial assistance.
This was stated by two prominent economists who are members of the Economic Advisory Committee (EAC) and the panel of economists formed by the Planning Commission (PC).
They said it is too early to predict anything precise about the course of action to be proposed by the two teams for 'Macro-Economic Stabilisation Plan'. "However, it looks to be almost certain that Pakistan would follow the Fund's policy in one way or the other," they stated.
If Pakistan enters into this programme, which looks imminent, then the government would have to follow the IMF instructions or conditionalities without taking any financial assistance. The options for the country, they said, are limited in the context of increasing budget and trade deficits.
President Asif Ali Zardari, in his maiden media interaction after taking oath as president, said that Pakistan would not seek an assistance package from the IMF. He said the government will go for austerity measures to cut down the expenditure.
However, economic analysts are of the view that Pakistan's re-entry in IMF programme would help gain the investors' confidence as the country is in the dire need of foreign investment and curtailing the capital flight from the country.
The PC's panel of economists has started its work. This work would be integrated with that of the EAC and final report would be submitted to the government most likely by the end of this month or early next month.
The first and foremost task of the PC panel of economists is to frame terms of reference (TORs). This task is going to be finalised in a week time. Following this, some working groups would be formed and TORs will be framed for each group.
Groups on growth, social protection, institutional framework, and micro economy will be formed, said a member. He was of the view that EAC and PC panel of economists will also look into each other work before submitting the Economic Stabilisation Plan. He also opined that political stability is must for the economic stability.
"We hope that political stability will come to the country after the presidential election," he said. Since the transition is over, the central government needs not to take any ill-conceived measure in any province, especially in Punjab that could spark a wave of political instability. The PC has already constituted task forces on energy, food, infrastructure, and social sector to recommend necessary measures to the commission, they said.