IMF team in Pak. to assess state of economy

By B. Muralidhar Reddy

ISLAMABAD, SEP. 2 An advanced team of the International Monetary Fund (IMF) arrived here today for an `assessment' of the state of the economy to enable the organisation take a final decision on resumption of stalled economic assistance to Pakistan.

The advance team would hold preliminary discussions with the officials of Pakistan Central Bureau of Revenue (CBR) on various measures initiated by the military government for documentation of the economy and widening of the tax-base. Mr. Sena Ekin, IMF Assistant Director Middle Eastern Region, is expected here on September 7 on talks for resumption of financial assistance withheld for the last 18 months.

Pakistan is confident that the Fund would resume its assistance programme as the Musharraf Government has fulfilled majority of the conditionalities imposed by the IMF which include steps to augment tax revenues and documentation of the economy.

At the risk of incurring the wrath of the traders and middle class, the military Government has gone ahead with imposition of General Sales Tax (GST), brought agricultural lands above a certain ceiling level under the tax bracket and made it obligatory for the traders to file their tax returns.

Pakistan has been anxiously awaiting the arrival of the IMF team to hold the crucial negotiations. Statements from the leading lights of the Government seem to suggest that Pakistan is a bit annoyed with the bosses of IMF for what is termed as `frequent shifting of the goalposts' by the Fund for resumption of economic assistance programme. The reference is additional conditionalities that are sought to be imposed.

Reports in the Pakistani press suggest that the IMF is pressuring Pakistan to sign the CTBT and initiate steps to reduce tensions with India if it is eager on early resumption of economic assistance.

Pakistan is keen on early resumption of IMF assistance as foreign exchanges reserves of the country have dipped to a dangerous low. Besides, there is the real danger of Pakistan defaulting its loan obligations if the international financial agency does not come forward with a new package. The IMF has suspended its assistance programme after the May 1998 nuclear tests. The suspension was partially lifted in July 1998 but the programme was once again interrupted by the Kargil conflict and the subsequent military coup.

The estimate of external debt of Pakistan vary from $30 to $35 billion. The situation is grim as it is neither servicing the debts and interest liabilities with Paris and London Club nor paying for the oil imports from Saudi Arabia. The London and Paris Club countries had provided a short-time relief by rescheduling Pakistan's debts for two years.

In 1998, Saudi Arabia had agreed to continue oil supplies on deferred payments. The relief period for debt and oil payments runs out by the end of this year and according to estimates Pakistan would require $5 billion just to service its debts.

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Section  : International
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