December 8, 2001	Saturday	Ramazan 22, 1422

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ISLAMABAD, Dec 7: In a major policy shift, the International Monetary Fund has allowed Pakistan a budgetary deficit target of 5.7 per cent for 2001-2002, to effectively help address concerns on poverty and stimulate growth in the country.

“We had earlier agreed to enhance budgetary deficit target from the original 4.9 per cent to 5.3 per cent, but now we are allowing Pakistan government to stretch this target further to 5.7 per cent for substantially alleviating poverty and accelerating growth,” disclosed a senior IMF official.

Talking to Dawn here on Friday, the IMF Senior Representative in Pakistan, Henri Ghesquiere, however, said the government would have to increase funding for social sector under the Khushal Pakistan programme to justify relaxation in budget deficit target.

All the three IMF lending programmes offered during the last one decade had four per cent of the GDP as the end-year budgetary deficit target, which was never met and hence no programme was completed. Only the ten-month-long $596 million Standby Agreement (SBA) that ended on September 30 this year was successfully completed, though the target set for the budgetary deficit for the whole year still looks far from achievable.

Still, ostensibly on the basis of the completion of this programme, a new three-year $1.3 billion Poverty Reduction Growth Facility was approved by the IMF Executive Board in Washington on Thursday. The first instalment of the $109 million 36-month lending programme, the IMF official said, would be disbursed to Pakistan next week.

“There will be 12 equal instalments of the new lending programme,” he said, adding that countries like Pakistan generally had a 60 per cent lending quota under Special Drawing Rights, which had now been increased to 100 per cent as a special favour by the IMF Executive Board.

Mr Ghesquiere said as a result of the fallout of Sept 11 events, the Central Board of Revenue could not achieve desired revenue targets during the first quarter of the current financial year.

This was also one of the reasons for the IMF to initially allow the relaxation in the budget deficit target from 4.9 per cent to 5.3 per cent.