ISLAMABAD, Dec 1: Prime Minister Syed Yousuf Raza Gilani will chair the forthcoming meeting of the National Finance Commission (NFC) to sort out differences on distribution of resources among the four provinces, said Adviser to Prime Minister on Finance Shaukat Tarin on Monday.

Under the constitution, only a federal finance minister is authorised to head the NFC meeting for distribution of resources from the federal divisible pool to the federating units, said the adviser while responding to a question after attending the 5th Citi-PPAF Micro-entrepreneurship Awards 2008.

Sindh, NWFP and Balochistan have already questioned the composition of the NFC committee and feel that the inclusion of State Minister for Finance Hina Rabbani Khar as member from Punjab would give additional leverage to the province in deciding distribution of resources.

Answering a question, the adviser said the country’s foreign exchange reserves had risen to $10 billion after the first tranche of $3.1 billion from the International Monetary Fund (IMF).

Asked whether the ongoing tension between India and Pakistan would cast any impact on the economy, he conceded that the Mumbai incident was impacting the economy and the government was trying to defuse the tension in the region.

Mr Tarin disclosed that the stock markets would start normal functioning in couple of days. The IMF has already conveyed to Pakistan to avoid using public money for supporting stockbrokers.

He said the next poverty reduction strategy paper would be initiated by end of this year.

Earlier, speaking at the award ceremony, the adviser said the government had prepared a comprehensive policy framework to manage the current economic crisis with a stabilisation programme with adequate safeguards for protecting the poor and most vulnerable with income support, insurance and other mechanisms.

“Our first priority is to take decisive action to restore growth momentum and microeconomic and macroeconomic stability,” he said, adding the government is fully cognizant of the fact that there are accumulated twin imbalances of trade and fiscal deficits that need adjustment.

“We are equally alive to the fact that if timely and well sequenced action is not initiated immediately it will lead to substantial economic setback reflected by depreciation of the rupee further and high inflationary pressures,” he remarked.

He further said that a simultaneous focus is on identification and rectification of structural weaknesses of the economy over the medium term with sound strategies, development priorities and institutional improvements.

He lauded the catalytic role Pakistan Poverty Alleviation Fund (PPAF) played in last eight years in developing the microfinance sector as well as providing non-financial services such as water, infrastructure, health and education at the grassroots.

“As a market developer and the single largest financer, PPAF has driven the sector enabling its partner organisations to scale up their operations”.

“We already see evidence of NGOs converting from small boutique outfits, to specialised service providing institutions and subsequently transforming into microfinance banking institutions while maintain a clear focus on graduating excluded and poor but productive households as successful and thriving micro-enterprises”, he remarked.