May 4, 2002	Saturday	Safar 20, 1423

Please Visit our Sponsor (Ads open in separate window)

ISLAMABAD, May 3: A five-member IMF mission headed by its senior director Clause Enders arrived here on Friday for two weeks visit to review the current state of the Pakistani economy with special reference to budget for 2002-2003.

Immediately after having reached the capital, the review mission held meetings with the senior officials of the Ministry of Finance and Central Directorate of National Saving (CDNS).

Pakistan was expecting the release of third tranche of $109 million, out of $1.3 billion Poverty Reduction Growth Facility (PRGF) by early July this year. The mission after meeting the government officials would prepare its report for the consideration of Fund’s Executive Board to extend the third instalment to Pakistan.

According to informed sources, Dr Ashfaque Hasan Khan, economic advisor to the ministry of finance briefed the IMF mission about the performance of the economy during the 10 months of the current financial year.

However, sources said that the mission expressed its concern over the declining revenues and said that the Central Board of Revenue should meet the three time downwardly revised revenue collection target of Rs414bn.

The mission also inquired as to why the exports could not pick up and called for diversification of items and their value addition as was done by other countries specially Bangladesh.

The advisor informed the mission that due to Sept 11 events of last year there were reduction in custom duties and that it will perhaps take some more time to start receiving adequate custom duties. The mission was told that imports were down by 30 to 35 per cent during the first six months of 2001- 2002. However, the situation was gradually improving. Generally it is said that some improvements have taken place in the US economy which has started helping other economies of the world specially those of the developing countries.

Sources said that the mission was told that foreign exchange reserves have reached to $5.3bn on Friday which were further expected to be enhanced to $6bn by June this year. Similarly, foreign remittances which have doubled during the first nine months of 2001-2002 and reached to $1.6bn, will touch the figure of $2bn by the end of the current financial year.

The increase in reserves has provided stability in the exchange rate and had made the job of the State Bank further easy to move towards a unified exchange rate regime.

The inflation, the mission was informed was at three per cent in the first nine months and as such was the lowest in three decades.

Sources said that the mission was told that Pakistan was expecting substantial debt-for-social sector swaps from a number of countries with a view to remove poverty.

The mission appreciated that the government was committed to structural reform programme that was initiated in December 1999. The members of the mission expressed hope that there will be a continuity in policies with a view to remove distortions from the economy.

Sources said that the IMF review mission was also informed that the current account deficit has improved and it was now surplus by $1.66bn which was 2.6 per cent of the GDP. Similarly, domestic debt had declined by Rs112bn and that the external debt of $38bn was static during the last three years.