ISLAMABAD: Pakistan on Wednesday sought the US intervention for restoration of the suspended $11.3 billion International Monetary Fund (IMF) bailout programme on assurance of implementing the economic reforms agenda.
The appeal was made to US President Barack Obama’s Senior Adviser David Lipton by Finance Minister Dr Abdul Hafeez Shaikh. The economic and political pundits are terming the US official’s visit “very significant” just before the start of an IMF mission visit on January 30th.
“There is strong belief in the corridors of power that a phone call from David Lipton to the IMF desk is enough for the restoration of the IMF loan programme,” said a senior finance ministry official in the external affairs wing on condition of anonymity, adding that there was a political cost to it.
The Pakistani side assured the visiting delegation that it would raise power tariffs and restrict the subsidies particularly to Pakistan Railways.
The IMF suspended the bailout programme in July 2010 after the country was unable to implement the reformed General Sales Tax, failed to carry forward power sector reforms and breached the fiscal deficit limit.
“The Pakistani side is in talks with political forces in the country for paving way to take those necessary measures for the restoration of the loan programme,” said the finance ministry official.
Pakistan’s economic team briefed the US delegation about the bleak economic picture and sought its intervention for the restoration of the loan programme, which has virtually halted inflows from other donors, causing massive domestic borrowings to finance the soaring budget deficit.
“The adviser and his team were given a detailed briefing on the Mid-Term Economic Review through a presentation. The presentation covered all the aspects and areas of the current economic situation of the country, states an official handout of the finance ministry.
The Pakistani side informed the visiting delegation about various measures taken for economic revival. The finance ministry briefed the delegation that the budget deficit during first half of the year was restricted to three per cent of the total size of the economy against earlier assessment of 3.2 per cent. These measures include cuts in federal and provincial spending.
Other measures the government is taking include improved budget management, deferring subsidies on fertiliser and restricting railways subsidies of Rs30 billion and rationalisation of tariff subsidy. “Ban on fresh recruitment is also undertaken by the government and limitation of the petrol usage,” the handout said.
Published in The Express Tribune, January 27th, 2011.
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