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Pakistan, IMF to hold crunch talks this week

* Negotiations a contingency plan if Pakistan fails to get lending from other financial institutions
* Pakistan seeking $6 billion

By Sajid Chaudhry

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) will conclude negotiations on the Economic Stabilisation Programme this week in Abu Dhabi, a senior official in the Finance Ministry told Daily Times on Sunday.

The official said negotiations on the micro-economic programme would enable Pakistan to seek lending from the IMF without further negotiations if Pakistan failed to get lending from other financial institutions, donors and the Friends of Pakistan forum within 30 days.

The Pakistani team would present the economic stabilisation plan the country has developed, which got initial endorsement from international financial institutions (IFIs) during the recently concluded World Bank-IMF annual general meeting at Washington, he disclosed.

Under the plan, the government believes it has shown improvement in macro-economic indicators, reduction in fiscal deficit, elimination of non-productive expenditures, shifting of development projects from the Public Sector Development Programme to public-private partnership and major enhancement in revenue generation. The official said the plan would bring around 7 million poor people under the social safety net, train one member each of poor households to enable him to earn a living, and would provide health insurance.

About overcoming Pakistan’s immediate economic worries, he said a $3 billion financial resource gap was estimated. The IFIs felt the resource gap was around $4.2 billion.

Six-billion dollars: However, the official said the government wanted to ensure the availability of $6 billion through various initiatives so that the financial resource gap could be overcome and foreign exchange reserves were increased. For this purpose, Pakistan was required to increase its tax-to-GDP ratio from the existing 10.5 percent to 15 percent over the next five to seven years.

He said Pakistan would not face difficulty in getting a loan from the IMF as the government had withdrawn subsidy on oil and power sector after oil prices fell in the international market.

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