IMF defers fifth tranche of $1.2bn

ISLAMABAD: The International Monetary Fund (IMF) has deferred the disbursement of the fifth tranche of $1.2 billion to Pakistan for an indefinite period as the Executive Board meeting scheduled to take place on Wednesday has been postponed.

The bottleneck in the way of postponed Executive Board meeting to consider Pakistan’s request under the Stand-by Arrangement (SBA) is the presentation of draft law on Value-Added Tax to the Punjab assembly. The government has already submitted the draft law in the National Assembly and the provincial assemblies of Sindh, NWFP and Balochistan.

A senior official of the Ministry of Finance told Dawn that the bill had now been sent to the Punjab assembly to clear the last hitch of the IMF Board to discuss Pakistan’s case. The toughness of IMF is reflected from its stance that it was not prepared to accommodate the verbal commitment of the government.

The IMF insisted on production of the documentary evidence of the presentation of draft law to the Punjab assembly, which would be sent to the Fund on Monday, the official said.

The official, however, said that the government had informed IMF that the adoption of VAT bill depended on legislators to adopt, reject or amend the bill. As part of the structural reforms agreed with IMF in Nov 2008, the government has planned to introduce VAT effective July 1 this year in place of GST.

The World Bank-IMF spring meetings have been scheduled for April 24 and 25 in Washington, and during that time, IMF officials will be busy and the Executive Board would not be able to hold the meeting.

However, sources in the finance ministry were confident that the IMF board could meet before the spring meetings since all requirements had now been met. The delay could be the matter of a few days and not months, the official said.