The International Monetary Fund (IMF) has acknowledged that its team, headed by Washington-based mission chief for Pakistan Adnan Mazari, was in Islamabad to check implementation status of a couple of things which are part of the programme. This was stated by Caroline Atkinson, Director, IMF Foreign Relations Department, at a press briefing in reply to a question sent by this correspondent through e-mail on Friday evening.
Key issues which have been discussed by the IMF mission with the GoP top economic managers were non-implementation of value-added tax (VAT) replacing general sales tax (GST), increase in power tariff, and projected growth rate. "We have had a small team in Islamabad to carry on discussions with Pakistan on the next stage of the program," Caroline said.
Prime Minister Yousaf Raza Gilani also held a meeting with IMF regional chief for South Asia in Washington and apprised him of the government's efforts to broaden the tax base in consultation with the provincial governments and keep the budget deficit level close to 5.1 percent. Gilani urged the IMF leadership, and its board, to take into account ground realities and practical difficulties Pakistan is facing, while suggesting the required reforms measures.
There were unconfirmed reports that Pakistan had also requested Washington to help release the IMF next tranche. "We are still expecting that there would be a Board review meeting scheduled in May, probably in early May, and when we have that date of course we'll let you know," she added. She did not confirm the date for the Board' meeting which is expected to approve next tranche of $1.2 billion. However, in Pakistan there are speculations that the meeting is schedule for May 3, 2010.
Replying to another question by one of the participant, she said that for Pakistan, "there is a program of adjustment and there are different ways" that governments have to choose to reach that adjustment. "We will be proposing a program to the Board that includes various measures. I'm not going to go into those measures now. They will be consistent with what we have in the basic program," she added.
More generally, she stated that the governments have to decide which measures should be implemented and IMF will help them in two ways, in a way. The first is to determine the overall size of adjustment measures that may be needed. And the second is to make sure that the measures they're proposing are likely to yield whatever is needed. "At the same time, we also give them financing and they don't need to take as much adjustment measures as they do if they didn't have financing".
"We do get involved in making plan and this is a more recent thing, as you know, in making sure that the most vulnerable and socially weak are protected," she concluded. Islamabad is hopeful that the US administration's influence on the IMF Board would help release the next tranche, whether earlier conditions are met or not.
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