IMF conditions hitting businesses: Humayun Akhtar

KARACHI: The International Monetary Fund’s prescription of hiking interest rates, taxes and power tariffs in the country will be counterproductive for the manufacturing sector and economy on the whole, a former commerce minister and businessman said.

In a meeting with bed linen exporters, the former minister, Humayun Akhtar Khan, said the interest rates have been cut globally to encourage businesses while in Pakistan, the situation is exactly otherwise.

“The economy is sustaining on the IMF loans and the government is blindly following its dictations,” he said. Akhtar said that the foreign direct investment (FDI) must be channelised into export-based industries, not just in telecom and power sectors, to strengthen the economy.

IMF, govt agree to revise inflation target to 15 percent

 ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have decided to revise the inflation target to 15 percent from 13.5 percent for the current fiscal year in the wake of rise in commodities’ prices and electricity tariff, The News has learnt.

The inflation target was fixed at 9.5 percent in the budget and later revised to 13.5 percent.
Federal Public Sector Development Programme (PSDP) has been slashed to Rs150 billion from Rs 280 billion. Both sides have also agreed to cut the provincial annual development programmes by 50 percent.

IMF loan tranche uncertainty drags KSE lower

 KARACHI: The Karachi share market dropped on Wednesday owing to uncertainty about the release of the next tranche of the International Monetary Fund (IMF) loan to the country, dealers said.

“Negative activity was witnessed because of concerns about the country’s fiscal position as government officials met an IMF team to discuss the release of the next tranche,” said Ahsan Mehanti, a director at Arif Habib Investments.

The KSE 100-share index lost 64.22 points, or 0.60 percent, to close at 10,617.65 points. The KSE 30-share index shed 91.30 points, or 0.89 percent, to end at 10,168.59 points. Shares of 375 companies were traded, out of which 153 advanced, 203 declined, while 19 remained unchanged.

IMF concerned over Pakistan’s economic reforms

KARACHI: The International Monetary Fund (IMF) has expressed concern over Pakistan’s slow implementation of energy sector reforms and a revised general sales tax, officials said on Tuesday.

The IMF and Pakistani officials are meeting in Islamabad to discuss the possible release of the sixth tranche of an $11 billion emergency loan agreed in November 2008, which has kept the economy afloat. Talks end on Tuesday.

“Though things are not very good, it is still too early to say whether the sixth tranche is in danger,” an official source said.

If the IMF does not approve the release of the sixth tranche other donors would be hesitant to provide aid or loans, as well, which would threaten Pakistan’s economic stability.

Crucial talks with IMF, WB put off for three days

The talks have been suspended so that the economic managers could seek President Zardari's intervention in taking difficult economic decisions.—Reuters photo

ISLAMABAD: The crucial talks between the government and twin missions of the International Monetary Fund and World Bank remained suspended for a day on Tuesday and then put off for another two days to seek top level political intervention in difficult economic decisions.

Informed sources told Dawn that the two sides were originally scheduled to conclude on Tuesday, or latest by Wednesday, their negotiations on macroeconomic framework and on a strategy for economic stabilisation and containing the rising fiscal deficit.

Policy-level talks with IMF to begin tomorrow

ISLAMABAD: Pakistani officials and the visiting review mission of the International Monetary Fund (IMF) will start crucial policy level talks from Monday to decide the fate of the $1.7 billion tranche of the Standby Arrangement (SBA), it is learnt.

Federal Finance Minister Dr Abdul Hafeez Sheikh and SBP Governor Shahid Hafeez Kardar will lead the Pakistani side, while the IMF’s delegation will be headed by Adnan Mazarei, mission chief for Pakistan. The policy level talks, officials said, would continue for two to three days.
During the technical level talks, Pakistani and IMF officials finalised targets of real GDP growth at 2.8 percent, inflation at 14.5 percent, current account deficit at minus 2 percent and FBR’s revenue collection at Rs1,689 billion provided the government took additional measures such as imposing flood tax and abolishing sales tax exemptions.

IMF power deal sealed after US dropped trade links

WASHINGTON: A last-minute deal among G20 nations to give emerging economies more voting power at the IMF was made possible when the United States abandoned efforts to link the shift to trade balance targets, sources said on Wednesday.

US Treasury Secretary Timothy Geithner introduced the idea of tying actions to bring about a better-balanced global economy to more International Monetary Fund voting power during meetings of the Fund in Washington last month.
Geithner fleshed out his proposal in a letter to finance ministers of the Group of 20 nations in which he pressed for a deal to limit current account surpluses and deficits to a specified share of national output.

What to expect from IMF’s next meeting

KARACHI: Officials of the International Monetary Fund (IMF) and Pakistan are due to meet on Wednesday in Islamabad to discuss the country’s performance for the release of the sixth tranche of a $11 billion IMF loan.

Policy level discussions will take place on November 1-2, according to official sources.

The last review was completed in May and the review for the release of the sixth tranche has been delayed since August over several issues, such as an increase in power tariffs and the implementation of a reformed general sales tax (RGST).

Massive restructuring of budget in the offing: IMF

Sources told Dawn on Wednesday that IMF authorities had already indicated their willingness to raise the fiscal deficit target by 0.7 per cent from the originally budgeted four per cent for the current year. – File Photo

ISLAMABAD: With fiscal deficit rising, a review mission of the International Monetary Fund (IMF) will be visiting here next week to assess the country’s financial requirements and discuss with authorities the need for a mid-year budget restructuring.

Sources told Dawn on Wednesday that IMF authorities had already indicated their willingness to raise the fiscal deficit target by 0.7 per cent from the originally budgeted four per cent for the current year.

Hafeez says IMF assures next tranche on May 14

WASHINGTON: Finance Adviser Dr Abdul Hafeez Sheikh has said that an arrangement with the International Monetary Fund compels Islamabad to increase power tariff by additional six per cent but the government is trying not to pass on the entire burden on consumers.

Dr Hafeez explained at a news conference here on Tuesday that the agreement required Pakistan to increase power tariff in three instalments of six, 12 and six per cent, respectively.

IMF & Pakistan: Some key issues & problems

New VAT is one of the main issues of contention
KARACHI: The International Monetary Fund’s (IMF) board will likely to meet in mid-May to consider the next tranche of Pakistan’s $11.3 billion loan.

The IMF’s board had originally been scheduled to meet at the end of March to approve the next portion of the emergency package, which was first agreed in November 2008.

However, differences over several issues, such as an increase in the power tariff and implementation of a value-added tax (VAT), have delayed approval of the tranche.