ISLAMABAD, Sept 9: The International Monetary Fund (IMF) on Tuesday expressed its concern over rising poverty in Pakistan and called for improving governance, financial system, public finance and social sector indicators.

Milan Zavadjil, the head of IMF review mission, said the IMF, like the World Bank and the Asian Development Bank, was concerned over rising poverty in Pakistan but this was not an issue that could be resolved in weeks.

“Poverty is too high in Pakistan, although most of the economic indicators are performing quite well,” he said.

Towards this end, he said, the IMF would assist the government of Pakistan in strengthening institutions and developing financial system, public finance, governance and statistical system that was still very weak.

Speaking at a news conference with Finance Minister Shaukat Aziz and IMF Executive Director Abbas Mirakhore on the conclusion of the sixth review, Mr Milan said increased spending were absolutely crucial for poverty reduction in the next five to 10 years. “This (spending on poverty reduction) needs to be increased and made effective,” he added.

The successful completion of sixth review of the government’s economic performance under $1.47 billion Poverty Reduction and Growth Facility (PRGF) would enable the IMF to release two tranches of around $230 million to Pakistan shortly.

He parried a question about review mission’s recommendations to the executive board of the IMF but said hopefully Pakistan would be able to get two tranches at the same time.

At this stage, Finance Minister Shaukat Aziz said that the government was very much aware of various challenges, including poverty, and the prime minister and the president were all committed to improving governance and reducing poverty.

He said the present government in Pakistan was spending for the first time big amounts of money to reduce poverty. In this regard he referred to Rs129 billion spent on social sector during the last financial year.

The IMF mission head said generally the outcome of the government’s steps in 2002-03 was remarkable as all the economic targets were met particularly the achievement of high growth rate of 5.1 per cent against its target of 4.5 per cent and 20 per cent growth in exports despite stagnation in the US and EU markets.

Looking ahead the IMF, he said, was confident that targets could be achieved with no upsurge in inflation but growth rate further improving. He said that with wide range of steps already in hand and with gradual increase in growth the economy was now taking off.

He said the combination of two reviews (fifth and sixth) by the IMF was in recognition of the achievements of the government to stabilise the economy and he would suggest to the executive board to hold six-monthly reviews in future instead of quarterly reviews in view of strong economic foundations in the country.

Responding to a question, Mr Milan said he had good discussions with officials of National Accountability Bureau (NAB) and said anti-money laundering law and Benami law would be useful instruments.

Responding to another question, he said that IMF had welcomed that PRGF would be its last programme in Pakistan as the country did not need fresh funding because of accumulation of over $11 billion in foreign exchange reserves.

Finance Minister Shaukat Aziz said Pakistan would continue to have consultations with IMF in future. Next such consultations, he said, would take place in Dubai at he annual meeting of the World Bank and IMF during this month.