However, Khan’s appointment will be finalised after approval by Prime Minister Yousaf Raza Gilani.
A senior official of the finance ministry told The Express Tribune that Khan would discuss ways with the country’s economic team to meet conditions, including end of power subsidy and tax reforms, of the previous IMF programme, which ran from November 2008 to September 2011.
He will also prepare recommendations and suggest precautionary measures in order to ensure that Pakistan gets a new loan in case the IMF is approached.
According to sources, a wing has been set up in the finance ministry, headed by Mohsin S Khan, which will monitor the reforms programme, take steps to meet IMF conditions and accelerate the pace of economic development.
According to sources, the IMF had expressed its willingness to offer a new loan during sideline meetings with Finance Minister Hafeez Shaikh when he visited Washington recently for annual meetings of the World Bank and IMF. However, the IMF linked approval of the new loan to submission of a consultation report, highlighting the economic progress made by the country.
The IMF stressed that following a review of the progress report, it would be able to decide whether to issue a letter of comfort to Pakistan.
Published in The Express Tribune, October 19th, 2011.
COMMENTS (6)
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@Khurram Mohiuddin: Amazing examples Brazil, India and unknown many other countries.
Lets start with Brazil: 'As it is the $41.5 billion of foreign currency that the IMF marshalled to back Brazil's currency, was doomed to end up with the speculators, leaving Brazil with its foreign currency debt increased by that amount. So often has this scenario been played out (...) [with] other currencies kept at artificial heights with interest rates, that by now the ploy should be known to schoolboys. The government whose currency is attacked draws on foreign loans arranged by the IMF, and turns over the foreign currency to buy back its own paper. The "assisted" country ends up with the foreign debt to the amount of the "aid" while the speculators pocket the proceeds of the loans, and move on to the next replay of the scam.' - Wall Street Journal, op cit. Read The Brazilian financial scam online.
Moving on to India: India's minister of finance reports to IMF not parliament http://www.jstor.org/pss/4399453
@Meekal Ahmed: Everyone now knows what needs to be done. No one, however, seems to know how. The "outsiders" have an additional handicap; it takes some time to to come to grips with the idiosyncracies of our political sociology. In any case, good economic policy does not necessarily require good economists.
@Khurram Mohiuddin:
Yes, take a look at Turkey too. I just read in the FT that their first-quarter growth was in double-digits. They have done an extraordinary job of fixing their economy although they are vulnerable to a widening external current account deficit. At around 9% of GDP it is unsustainable and needs to be cut.
Let us also not forget Bangladesh which is certainly doing better than we are as well as some other countries in LA and Africa.
However, coming back to this appointment, Mohsin Khan is an extremely competent economist who has published widely and is recognized internationally. On that score there can be no doubt. The question is whether we need brighter economic minds. Both the FM and DC, Planning are professional economists of some standing. But either they have not been able to convince their political masters of the need for reforms (starting with the President down) or they are being ignored and over-ruled. It could be both. Mohsin Khan, as another 'outsider' is likely to face the same fate. His advice will be technically sound and he is very articulate. The question is whether, especially with the elections round the corner, anyone will listen to him. I fear not.
As for the "reforms" he is going to advise on, I am not aware of any either being undertaken or in the pipe-line. Unless giving one billion to the railways (and anyone else who asks) is a reform measure.
Finally, as an IMF-insider, Mohsin Khan will have an advantage. He speaks their language compared to the others who can only whine about "ground realities" as an excuse for non-performance. However, I hope he will keep in mind: "NO VAT, NO MONEY".
It seems Islamabad is being (will be run) run by consultants and retired bureaucrats and their likes
Moise
Really? Then why is that India, Brazil and many other countries who have previously taken IMF loans have prospered?
More debt won't solve Pakistan problems, especially IMF loan with it's non-transparent policies. There is not a single country in this world where IMF has success.