15 January 2005	Saturday	04 Zilhaj 1425

ISLAMABAD, Jan 14: The International Monetary Fund (IMF) has asked Pakistan to accelerate tax and revenue mobilization, contain rising inflation and expedite tightening of the monetary policy to achieve an accelerated and sustainable economic growth.

IMF Deputy Managing Director Agustin Carstens, on the conclusion of his two-day visit to Islamabad, on Friday identified six key challenges Pakistan faced at present to increase investment and economic growth and indicated that IMF looked forward to continue working with Pakistan to overcome these challenges.

These key challenges include an accelerated and sustainable growth, significant poverty reduction, maintaining the momentum in mobilizing tax and other budget revenue on a broad basis, keeping the inflation low, improving investors' confidence and acceleration in the tightening of the monetary policy by the central bank.

During his two-day visit, Mr Carstens met Prime Minister Shaukat Aziz, ministers and staff from the key economic ministries, as well as representatives from the State Bank of Pakistan and the financial sector.

The IMF analysis of Pakistan's economy was officially released by the Prime Minister Secretariat. The purpose of the visit was, first for Mr Carstens to appraise himself directly of the economic gains made by Pakistan in recent years under the government's comprehensive reforms programme and of prospects for further acceleration in these gains. That programme was supported by a now completed arrangement under the IMF's Poverty Reduction and Growth Facility (PRGF).

Second, the IMF deputy managing director also wanted to discuss how the IMF and Pakistan, going forward, could work together in addressing the challenges of accelerating growth on a sustainable and equitable basis, for the benefit of all of Pakistan's people.

"Going forward, the key challenge is to accelerate and sustain growth", said the IMF statement. An accelerated and sustainable growth which also significantly reduces poverty in Pakistan will require continuation by the government of its ongoing effort to address the human development and social protection needs of the country.

For this purpose, the momentum in mobilizing tax and other budget revenue on as broad basis as possible will need to be maintained, the IMF said. The IMF said a key challenge is to keep inflation low in order to further consolidate the gains in the investors' confidence, so critical to sustain high rates of investment and economic growth.

Meeting this challenge is likely to require some acceleration in the tightening of monetary policy already initiated by the SBP, it said. Mr Carstens appreciated the significant progress made in opening-up Pakistan's economy to international trade and competition by bringing down trade barriers and reducing import tariffs and in promoting the growth of exports.

He congratulated the Pakistan government for the successful implementation of the PRGF programme with the IMF. Full ownership of the programme by the Pakistan government had been key to its effectiveness.

Under this programme, Pakistan achieved impressive turn around in its external and fiscal position, restored growth and lowered inflation, rebuilt a comfortable level of international reserves and regained confidence of and access to the international financial market, the IMF noted.

Under the programme, Pakistan also implemented an ambitious and comprehensive agenda of structural reforms in particular banking system reforms, privatization, trade liberalization and governance reforms. These reforms are now bearing fruits, with accelerated economic growth and a significant pick up in both and domestic and foreign investment.

Mr Carstens indicated that the IMF looked forward to continue working with Pakistan after the completion of the PRGF programme. The IMF will continue offering its policy advice and technical assistance in the monetary and fiscal areas, in particular, drawing on its extensive international experience.