0
ISLAMABAD, July 18: As the United States seems in no mood to extend extra favours to Pakistan, the revival of the $11.3 billion International Monetary Funds (IMF) standby arrangement for Islamabad will remain a dream until it removes Washington’s apprehensions aroused in the wake of the Osama bin Laden’s killing in Abbottabad, Dawn has learnt.
In May last, two weeks ahead of the annual budget, Pakistan and the IMF in Dubai had reached an understanding on fiscal and economic measures and also agreed to have a full review of Pakistan’s macroeconomic situation in July that could lead to resumption of the Funds programme suspended since May last year.
As per this plan, a senior official in the finance ministry, who requested not to be named, told Dawn that the IMF has not indicated their willingness for holding review of the economic indicators for the outgoing fiscal year (2010-11).
Although, Pakistan could not implement the reformed general sales tax (RGST) in its true spirit in the new budget but sufficient sales tax exemptions were withdrawn to generate revenue.
Even on this issue, an understanding has been reached which was a precondition for disbursement of $1.7 billion tranche in July but still no reply was seen from the IMF.
The issue of the revival of the IMF programme is no more an economic but a political issue; said Executive Director of Islamabad-based Sustainable Development Policy Institute Dr Abid Suleri.
External flows of bilateral or multilateral donors have become political weapons, he said, adding major shareholders of these flows try to influence policy of sovereign countries.
As a major stakeholder, Pakistan has always approached and sought Washington intervention to soften the IMF conditions in case Islamabad has failed to comply with Funds commitments.
But this time, according to a source in the finance ministry, was not of achieving the revised targets agreed in the last review meeting held in Dubai but American apprehensions that needs to be redressed by Islamabad as precondition for revival of the suspended programme.
Pakistan has achieved the revenue target of Rs1,588 billion as well as curtailed its fiscal deficit at 5.3 per cent, which was already in line with the IMF conditions agreed in the Dubai review.
But Mr Suleri said it was an unfortunate reality that Pakistan has to follow American policy lines in a bid to get favourable returns from the IMF.
At the same time, no country or donor is willing to lend to Pakistan until the IMF issues a comfort letter about the Pakistani economy. Countries like Saudi Arabia and the Islamic Development Bank also conditioned their assistance with the IMF clean chit.
But getting this licence from the IMF, Pakistan will have to follow suits of Washington. Mr Suleri pinned hope on the visit of ISI chief to Washington, which could according to him pave way for the resumption of the IMF programme.
