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Paris moot to suggest steps for debt relief

April 20, 2002


ISLAMABAD, April 19: A two-day meeting of the Pakistan Development Forum (PDF) is due to begin on April 29 in Paris to discuss Pakistan’s current economic situation, with special reference to good governance, poverty alleviation and social development.

The meeting will also discuss Pakistan’s $38 billion external debt and suggest various measures to reduce this pile.

Japan, a member of the G-7 counties, is reportedly arguing with other bilateral donors and international funding agencies that Pakistan should not be offered fresh loans. Instead, only grants and other interest-free contributions be considered to help it reduce its debt mountain.

And that is precisely why Japanese government has discontinued its annual Yen Package loan under Official Development Assistance (ODA) and decided to offer only grants — the first such assistance in the shape of $300 million has just been extended to Islamabad.

According to official sources, although the forthcoming PDF meeting was not a pledging session, the government will seek enhanced assistance from the bilateral and multilateral donors for social sectors.

The PDF, formerly known as Aid-to-Pakistan Consortium, had met last year in Islamabad and now it was meeting in Paris to be participated by members of G-7 countries, the World Bank, IMF, Asian Development Bank and the International Finance Corporation (IFC). Also, 16 influential Pakistani businessmen and a number of French investors will attend the meeting. It is perhaps for the first time that Pakistani businessmen will be attending any foreign meeting by paying themselves for tickets, hotels etc.

The session of the PDF will be held after spring meetings of the World Bank and IMF in Washington for which Finance Minister Shaukat Aziz had already reached there. He is also scheduled to hold bilateral meetings with US Secretary of Treasury and other officials concerned.

A senior finance ministry official told this correspondent that PDF was meeting in Paris in keeping with a decision, according to which the Forum would hold its annual session alternatively in the French capital and Islamabad. Last year, it was held in Islamabad.

He said that Pakistan had finalized a massive programme for developing social sectors, especially to alleviate poverty for which it required a lot of foreign assistance. “We need financial assistance of PDF to further consolidate our development programmes,” he said, adding that if maximum outreach was to be achieved, then additional foreign funds will be sorely needed.

The sources said that Pakistan’s continued failure to achieve revenue collection target and increase exports will also be discussed during the meeting.

The representatives of donors were asking the government to complete the restructuring of the Central Board of Revenue (CBR) as early possible to increase revenues and plug leakages. They were alleging that people within the CBR were resisting reforms and rejuvenation of the organisation.

Similarly, the government has been advised by the donors to increase exports by managing industrial surplus, exploring more foreign markets and by going into value addition.

“So far, the government has not been able to adequately address both the issues of revenues and exports,” said a source in the local multilateral agency.