ISLAMABAD, Nov 19: A special cabinet meeting approved on Wednesday an economic stabilisation programme and asked the ministry of finance to complete negotiations with the International Monetary Fund for reaching an agreement for early release of $7.6 billion loan.

The meeting, presided over by Prime Minister Syed Yousuf Raza Gilani, was informed that the IMF facility was the only option for the government to stabilise the economy and put the country on road to development and prosperity.

A minimum of $3.2 billion will be credited to the State Bank of Pakistan’s account in New York soon after the approval of standby facility by the IMF board.

Adviser to the Prime Minister on Finance Shaukat Tarin briefed the cabinet on latest interaction with the IMF and its projected commitment to accept Pakistan’s economic programme spread over 23 months (7 quarters).

He said that the fund would provide loan at an interest rate of 3.51 per cent to 4.51 per cent.

Mr Tarin said that the IMF had never specifically asked Pakistan to impose tax on agricultural income. But it has advised the government to improve tax enforcement and tax-to-GDP ratio.

The meeting was informed that the IMF facility would help to stabilise the economy, contain inflation and budget and current account deficits and increase foreign exchange reserves.

The prime minister said that ministries should set their own targets and ensure their implementation. He said that he would visit each ministry for a briefing on its performance and future plans.

The cabinet was informed that the recent increase in interest rate to 15 per cent would not only control the core inflation but also help to raise savings by 2 per cent.

The government has worked out a multi-pronged strategy aimed at bolstering vital economic sectors; checking devaluation of the rupee, reinvigorating privatisation programme, expediting inflow of pending instalments from already privatised units, floating of workers remittances-based securitisation bonds, attracting foreign direct investment and getting support from “Friends of Pakistan”.

Mr Tarin informed the cabinet about an urgent need to develop an integrated energy generation and conservation plan in order to boost agriculture, industry and other production sectors. The capital market needs to be strengthened. Banking sector’s participation in overall economic development and for support small investors merit special attention.

He stressed the need for developing infrastructure on a nationwide basis and making efforts to create a social safety net to protect vulnerable groups.

He said that a set of administrative reforms should be put in place so that the government became an employer of choice for people who want to join it in the spirit of professional commitment and growth.

The adviser said that the government was preparing a 5- to10-year development rolling plan with predetermined goals containing a forecast for six quarters in terms of best possible economic planning and development.