ISLAMABAD, Sept 6: The International Monetary Fund (IMF) has expressed its concern over Wapda and KESC’s continued transmission and distribution losses.

It also stressed the need for generating more resources by achieving at the earliest the restructuring of Central Board of Revenue (CBR).

The visiting five-member IMF review mission headed by Mr. Milan Zavadjil met Finance Minister Shaukat Aziz here on Saturday and discussed with him the performance of the economy during January to June 2003 and future outlook for the country.

“While the Fund’s officials were appreciative of the current economic situation, they did express their concern over transmission and distribution losses of state sector power utilities (Wapda & KESC) and called for taking more measures to rectify the situation,” said the finance minister.

Talking to Dawn after having met the mission members who also included local IMF chief Mr Henri Ghesquiere, Mr Aziz said that Fund officials were generally comfortable with the performance of the CBR but they stressed the need for pushing reform agenda forward with the aim to increasing tax targets.

He said that Wapda’s financial health was being improved through new Financial Improvement Plan (FIP). Similarly, focus was also on removing losses of the KESC so that it could be prepared for privatization as early as possible. The good news, however, he pointed out, was that Wapda has met its financial benchmarks, though it could not satisfactorily lower its transmission and distribution losses.

The finance minister said that the IMF mission was told that reform programme was on target as all the financial criteria relating to revenue, fiscal deficit, bank borrowing, public sector spending and expenditure on poverty alleviation has been met.

“We have met over 95 per cent target of public sector spending as out of Rs134 billion, about Rs129.2 billion were spent in 2002-03 and this was appreciated by the IMF,” he added.

“Then we discussed future programme and we told the mission that the government will meet its 5.3 per cent and 4 per cent growth and inflation targets respectively during 2003-04,” the finance minister said.

The mission, he said, was also informed that the fiscal responsibility law was being sent to the Parliament for approval to limit undue spending by governments.

“I also told the mission that the government is revamping the whole National Savings Scheme (NSS) programme that aims at allowing the organization to go into the mutual fund business,” Aziz said. Nevertheless, he assured that the fixed income groups specially widows would continue to be offered more profit through new saving instruments.

Responding to a question, he said that the IMF was watching growth and private sector credit despite being satisfied on various other issues.

He said that the mission was also briefed about the government’s plan to float bonds with a view to getting new funding without conditionalities which are normally attached to loans from World Bank, Asian Development Bank and the IMF. “We have finally decided to float bonds worth $500 million this year, the details of which would be announced after World Bank/ IMF annual meeting in Dubai by end of this month,” he said adding that 12 foreign banks and investment houses have offered to float these bonds on behalf of the government of Pakistan.

The IMF mission, Aziz said, was told that the privatization of the Habib Bank Limited will be completed before December 2003.

Asked about other concerns of the IMF, the finance minister said that he himself has been saying that removing poverty, achieving good governance, attracting investment and providing new jobs were some of the main challenges of the government.

To another question, he said that the IMF was told that second stage of the banking and capital market sector reforms was being implemented. “The vision is to achieve sustained economic growth so as to ensure economic sovereignty,” he said.

He said while Pakistan did not have any intention to seek fresh IMF programme after the expiry of ongoing $1.3 billion Poverty Reduction Growth Facility (PRGF) in October 2004, the country would continue to borrow from the World Bank, Asian Development Bank (ADB) and the Islamic Development Bank (IMF) for funding development projects. The economic rate of return should be higher than the cost of loan,” he emphasised.

“Then I also briefed the mission about our debt strategy to repay $4.5 billion foreign loans in next three year period,” he said.