ISLAMABAD, March 15: The government has assured the International Monetary Fund that the structural reforms, specially those relating to the banking sector, CBR and KESC, will be completed by June this year.

Sources in the multilateral agencies said here on Friday that the Ministry of Finance had furnished to the IMF a Letter of Intent and a Technical Memorandum with the assurance that the Fund’s major conditionalities would be implemented by June this year.

The Board of Directors of IMF will be meeting at the end of this month to discuss the economic performance of Pakistan in the light of the recommendations of its review mission that visited Islamabad last month. The board was expected to disburse the second tranche of $109 million to Pakistan, out of $1.3 billion Poverty Reduction Growth Facility.

Through the LoI and Technical Memorandum, the government has indicated that the banking sector reforms had been accelerated to close down loss-making and insolvent branches of the Nationalised Commercial Banks (NCBs) and the Development Financial Institutions (DFIs).

The Fund officials had been informed that with the help of the Banking Sector Restructuring and Privatization (BSRP) loan of the World Bank, the government would shut down excess branches of United Bank, Habib Bank and the National Bank. Out of 1,900 branches, which the Fund had identified as non-profitable and desired to be closed by March 2003, around 800 branches had been closed down so far.

The government, the sources said, further informed the IMF that the privatization process of UBL, HBL and NBL had been started. The majority shares of the UBL will be sold by April this year, while National Bank’s 10 per cent shares had been offloaded through stock market. And now, 10 per cent shares of the Habib Bank were expected to be offered to the local investor by April this year.

As regards the Karachi Electric Supply Corporation, the Fund officials were informed that the financial and administrative restructuring of the organization had already been undertaken with $250 million loan provided by the Asian Development Bank. The company’s losses had been brought under control to some extent. But, according to Minister for Privatization Altaf Saleem, the KESC was incurring Rs50 million losses daily which needed to be controlled.

An action plan, the Fund officials were further informed, had been approved for the KESC to achieve the restructuring and the privatization of KESC by September 2002. Financial Adviser for the KESC - M/s PricewaterhouseCoopers - has been asked to complete the transaction according to the schedule.