ISLAMABAD, Oct 28: The International Monetary Fund has granted waivers on three structural performance criteria while approving on Monday the disbursement of two tranches amounting to $247.54 million (special drawing rights or SDR 172.28 million) to Pakistan under Poverty Reduction and Growth Facility.

The IMF executive board, which met in Washington, also stressed the need for further reforms to improve governance and reducing corruption besides broadening the GST to the services sector, said an IMF statement.

The waivers granted by the IMF related to a short delay in the submission of the fiscal responsibility law to Parliament, (which has already been introduced in the National Assembly, the approval of some minor new tax exemptions, and the non-removal of the exemption from withholding tax for National Savings Scheme instruments of less than Rs150,000.

The IMF executive board supported a move to semi-annual reviews of the PRGF arrangement given the strong improvement in Pakistan’s external and fiscal prospects.

The $1.5 billion three year PRGF carried an annual interest rate of 0.5 per cent, and is repayable over 10 years with a five- year-long grace period on principal payments. Pakistan’s PRGF arrangement was approved on Dec 7, 2001 and is due to expire in December 2004.

The board was informed that Pakistani authorities have stated that they do not intend to request a successor arrangement when the current PRGF expires in December 2004. The authorities, however, have stated that they intend to stay involved with the IMF after the arrangement expires, and to engage with the Fund in dialogue on how economic growth can be strengthened in the medium term.

Augustin Carstens, the deputy managing director and acting chairman of the IMF said: “Structural reforms also advanced. Financial and tax administration reforms proceeded largely according to schedule. In the energy sector, there were adjustments of most controlled prices and tariffs. However, there were some minor delays and setbacks in fiscal reform, and three structural performance criteria were breached.”

He said, it is essential to advance reform of public institutions, including the public energy sector, which should be undertaken with the World Bank’s assistance.