July 27, 2008	Sunday	Rajab 23, 1429

ISLAMABAD, July 26: Major international donor agencies have asked Pakistan to “put its house in order” to qualify for an increase in external support.

Informed sources told Dawn on Saturday that the International Monetary Fund (IMF), World Bank and the Asian Development Bank (ADB) had told the government to achieve the much-needed stability, without which they would not offer any ‘significant assistance’.

Foreign inflows of $2 billion, as promised by some donor agencies, could not be achieved by the end of June because of the coalition government’s failure to achieve political and economic stability.

A special reference has been made by the donors over the government’s failure to timely pass on the increase in oil prices to consumers, further complicating the economic situation.

A senior official at the ministry of finance told Dawn that the country was expecting adequate financial support from international financial institutions to improve its economy and foreign exchange reserves.

He said the donors had been informed that import of oil and food items at higher prices had caused real problems, knocking off $5.5 billion from foreign reserves in a short period of time.

The official regretted that the country’s reserves had been “pushed back” to the level of 2002-03, adding that the consumption-led growth was hurting economy gravely.

The official said the donors had also been requested to help bring $7 billion foreign investments to overcome a power shortage of 7,000MW. “While we need to encourage the installation of 100-150MW of small power units, we will have to persuade the donor agencies to help build bigger power plants to end power shortages by 2009.”

He said a decision had been taken to freeze non-development expenditures at the revised level of last year to improve the government’s budgetary position.“A ban has been imposed on the purchase of physical assets and expenditures of the Prime Minister’s Secretariat, Senate and the National Assembly have been cut,” he said, adding that budget of the National Accountability Bureau had also been cut by 30 percent.

The official said that a number of measures were being taken to limit the government’s borrowing from the central bank.