IMF seeks economic data till June 30

ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistan to provide economic statistics till June 30 in order to assess the economic situation of the country and whether the different conditions set by the lender for its loan programme have been met.

The IMF will prepare an initial report on the basis of these statistics, which will be considered for the next loan tranche of $1.1 or $1.2 billion in August.

Sources said Pakistan has met many conditions as electricity tariffs have been increased by 7.6 per cent from July and reformed GST has been introduced in place of Value Added Tax which has been approved by the World Bank.

Besides, for the resolution of power crisis and circular debt problem a separate company  has been formed named Power Holding Private Limited (PHPL), which has been transferred the amount of circular debt, estimated to be about Rs103 billion.

A mechanism, sponsored by the World Bank, has also been devised to prevent the circular debt problem from arising again.

According to the new mechanism, power distribution companies would have to keep revolving guarantees against their assets in banks and if a company fails to pay its outstanding dues in the future, payments will be made from the guarantees kept with the bank. Afterwards when the company gets funds, it will pay back the amount to the bank with interest.

The whole system will be regulated by the Power Holding Company, which will issue term finance certificates with the consent of the power distribution company which has a circular debt.

Sources disclosed that the demand of statistics by the IMF shows that the standby arrangement programme is on track. In a few days, a report on the economic performance in the last quarter of 2009-10 (April to June) will be sent to the IMF team in Pakistan.

Preparations for talks with the IMF to get next installment will begin this month and negotiations are expected at the end of July or in August in which facts and statistics of the last quarter will be debated.

Sources revealed that the term finance certificates issued by four power companies and kept as a guarantee have been declared ineffective by the State Bank of Pakistan (SBP).

Published in The Express Tribune, July 2^nd, 2010.