ISLAMABAD, June 27: The executive board of the International Monetary Fund is all set to approve on July 3 the next tranche of $109 million for Pakistan despite having concerns on revenue shortfalls, says a senior IMF official.

“The IMF board is meeting in Washington on Wednesday to have the second review of the Pakistan’s economy and approve the third disbursement of approximately $109 million, out of the $1.3 billion Poverty Reduction Growth Facility,” Fund’s Senior Resident Representative in Pakistan Henri Chesquiere told Dawn.

Pakistan, he said, had requested for waiver on revenue shortfalls which was a matter of concern.

“But then obviously one has to see that there were low imports and large refunds paid to the exporters due to which revenue collection target for 2001- 02 could not be met.”

Imports, he said, were exceptionally low and there was also a problem of international oil prices that made the job of the CBR difficult. “But low revenue is an open question which has not been fully answered,” he said, advising the government to improve the overall tax administration for increasing the revenue. Revenue, he observed, should be the highest priority for adequately improving social indicators.

In reply to a question, the official said that unless the law and order situation was improved and Foreign Direct Investment increased, it would be difficult to resolve major economic issues. “What happened in Karachi has discouraged the foreign investors,” he said, adding that tension on borders was also one of the causes of low FDI which had depressed the private sector’s activities.

“The private sector cannot be persuaded but only be convinced to make new investment,” he believed.

Pakistan, he said, needed to spend more on social sectors, especially health and education. “The government has diverted resources to provinces for uplifting social sectors and now it is to be seen how do they manage financial matters, especially financial devolution at the district level.”

Asked to comment on Finance Minister Shaukat Aziz’s recent statement that PRGF would be the IMF’s last programme in Pakistan, he said if the country fully implemented the reform programme, improved its revenue, continued to undertake financial sector reforms and improved the performance of the power sector, there might be no need for any new Fund’s programme.

He, however, said that dialogue with Pakistan would continue on policy matters even if there was no IMF programme as was the case with many other countries.

In reply to a question, he said the reversal of policies would not help sustain economic growth, achieve poverty alleviation and get foreign debt reduced.