ISLAMABAD, May 1: The IMF has linked disbursement of the eighth and last tranche of $109 million out of the $1.3 billion Poverty Reduction Growth Facility with the meeting of four key conditions by June 30.
Privatization of HBL, submission of fiscal responsibility law in parliament, elimination of exemptions from the withholding tax on interest income, and establishment of formulaic link between rates of return on GP fund and PIB yield are the four requirements that the Pakistan government must meet, sources told Dawn.
The IMF has asked the government to privatize HBL through effective transfer of majority ownership to private investors by the deadline.
It has also urged the Jamali government to eliminate all exemptions from withholding tax on interest income and establish formulaic link between the rates of return on General Provident Fund and PIB yield by June 30.
However, a source in the Privatization Commission said that since Expressions of Interest (EoIs) had been invited for the privatization of HBL by May 31, it was not possible to complete the transaction by June 30 as asked by the IMF.
At least, he pointed out, it will require three months to disinvest the HBL.
The sources said that the Fund authorities, during talks with Finance Minister Shaukat Aziz in Washington last month, had called for disinvesting the HBL by June 30, 2003. However, he said that he would take up the issue with the ministry of privatization and the PC to get the HBL privatized as per the understanding reached with the IMF.
The sources said the Fund authorities had raised objections as to why the KESC could not be privatized by July 31, 2002, as per the Structural Performance Criteria agreed earlier between the two sides. Expressions of Interest (EoI) were invited in March 2002 by the Privatisation Commission to disinvest KESC for which the Asian Development Bank had also offered $150 million to facilitate its restructuring.
“The disinvestment of the KESC was delayed for one reason or the other, and the funding provided by the ADB was used for improving the balance of payment position,” said an official concerned.
The IMF also regretted that another conditionality which could not be met by the government under the Structural Performance Criteria was the time-bound exemptions for sales tax and customs duties for imported equipment to covert cars/buses to CNG partially extended beyond the origi-nal expiration of November 1, 2002, and duty sales tax exemptions for CKD buses reinstated in December 2002.
Similarly, the establishment of a contributory pension scheme for new recruits in the civil service, and preparation of a third-phase public pension reforms package, prepared in collaboration with the World Bank, was delayed and later implemented in late 2002 instead of July 1, 2002, as was agreed with the IMF.
