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.

Pakistan seeks two waivers from IMF

ISLAMABAD: Pledging to completely eliminate subsidies on electricity by August this year, Pakistan has sought at least two waivers from the International Monetary Fund for slippages in important macroeconomic targets in the first nine months of the current fiscal year and requested modifications in future programme milestones.

“We request waivers of non-observance for the end-March quantitative performance criteria on the overall budget deficit (excluding grants) and net government borrowing from the State Bank,” says a letter of intent (LoI) signed by Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh and SBP Governor Syed Ali Raza.

IMF assures Pakistan to get next tranche in May

ISLAMABAD: The International Monetary Fund (IMF) has assured Pakistan it will approve the release of the next tranche of an $11.3 billion loan at a board meeting on May 3, the Pakistani prime minister's office said on Wednesday.

Prime Minister Yusuf Raza Gilani said in talks with the IMF in Washington that his government was trying to broaden Pakistan's tax base and keep the budget deficit “close to” 5.1 per cent of gross domestic product, according to a statement from his office.

Malaysian firm willing to invest $500m in Pakistan

ISLAMABAD: Renexus, a renowned Malaysian company, is willing to invest around US$500 million in Pakistan for building water treatment plants on Build, Own and Operate (BOO) basis.

This was stated by John Klerr, Executive Chairman of Renexus during his meeting with Acting High Commissioner for Pakistan in Malaysia, Dr Imtiaz Ahmad Kazi in Kuala Lumpur today.

Renexus deals in water treatment plants, construction infrastructure development, information and communication technology, says a press release received here today from Malaysia.

IMF Board set to meet in coming weeks on Pakistan

WASHINGTON: The International Monetary Fund’s Executive Board will meet before mid-April to review Pakistan’s loan after a meeting this month was postponed to enable a value-added tax law to be submitted to provincial assemblies, the IMF said on Wednesday.

The IMF meeting is to approve the fifth tranche of a loan to Pakistan, which

turned to the IMF for an emergency package of $7.6 billion in November 2008 to avert a balance-of-payments crisis and shore up reserves.

No risk to Pakistan's ratings: Moody's

KARACHI: Political wrangling in Pakistan is hampering the government's ability to focus on economic issues but poses no immediate risk to its sovereign ratings, Moody's Investors Service said on Wednesday.
 
Moody's has a B3 sovereign rating for Pakistan with a stable outlook.

Differences over VAT jeopardises IMF plan

ISLAMABAD: The International Monetary Fund (IMF) and the government have developed differences over the proposed value added tax (VAT), raising fears not only of the fiscal deficit surging during the current and next year but also about the completion of a $11.3 billion standby arrangement programme.
According to sources, the IMF estimates that the VAT will increase the country’s revenue by 0.8 per cent of the GDP next year, but the finance ministry fears that the collection will drop by Rs35-45 billion because tax collection authorities are not fully prepared to take full benefit of the new measures.

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.

KSE surges 183 points to hit 19-month high

KARACHI: The local investors returned to the Karachi bourse on Wednesday to place market on 19-month high above 10,100-point mark.

“The US statement to consider Pakistan’s request for civil nuclear deal infused confidence among locals to return to bourses after a quite a long time,” said Sajjad Mankani, Associate Director at BMA Capital Management.

IMF Board meets in Washington on 31st

To review Pakistan economy, approve $1.2bn tranche

KARACHI: The International Monetary Fund’s (IMF) Board of Directors will meet in Washington on March 31 to review Pakistan’s economy and approve the fifth tranche of $1.2 billion for the country.

A month ago, IMF and Pakistan government officials met in Dubai to take stock of the country’s economy for the quarter ended December 31, 2009, officials said. They said Pakistan met all the quantitative performance targets for end-December 2009, barring the budget deficit target, which exceeded by a small margin.

Govt urged to stop TCP from meddling in rice exports

KARACHI: Exporters have opposed intervention in rice export trade from the state-owned Trading Corporation of Pakistan (TCP) and accused it of disturbing market mechanism thereby depressing prices of basmati rice in the world market.
 
The TCP floated export tender for 25,000 tons of super basmati rice on Dec 18, 2009 for the disposal of rice procured by the corporation last year, which is presently stocked at Pipri godowns, near Karachi.

Trade between Pakistan, UK may be higher this year

Friday, January 08, 2010
By Farhan Zaheer

KARACHI: Over 100 UK companies have been functioning and performing well in Pakistan while others are keen to learn more about this market where entrepreneurial skills are thriving and opportunities attract new companies, said Sir Andrew Cahn, Chief Executive of UK Trade and Investment (UKTI).

He was speaking at the Institute of Business Administration (IBA) on Thursday. Cahn, who is on a two-day visit to Pakistan, said trade in goods and services between the UK and Pakistan was worth £1 billion last year and it is expected that this year bilateral trade will be higher.

FBR collects over Rs577bn revenues in first 6 months

Thursday, January 07, 2010
ISLAMABAD: The Federal Board of Revenue has collected revenues amounting to Rs577.337 billion during first-half of the current financial year, as against Rs553.833 billion collected during the same period of last year, showing an increase of 4.2 per cent.

The revenue collections in July-December included Rs208.594 billion as direct taxes and Rs368.743 billion as indirect taxes, Asrar Raouf, Spokesman for the FBR and Member Direct Tax policy, told APP on Wednesday.

Targets achieved under the IMF agreement: SBP

KARACHI: The State Bank of Pakistan (SBP) has achieved the targets, prescribed by the International Monetary Fund (IMF) in the Stand-by Agreement.

Banking sources told Geo News that in the quarter ending December 31, the Central Bank has achieved the targets of increasing the external assets and lessening the internal assets of banking system. While the Bank has also attained the target of giving loan to the government set under the Stand-by Agreement.

Forex reserves rise

Friday, January 01, 2010
KARACHI: Pakistan’s foreign exchange reserves rose to $13.96 billion in the week ending Dec 26 from $13.72 billion the previous week, a central bank official said on Thursday.

Reserves held by the State Bank of Pakistan rose to $10.29 billion from $10.04 billion a week earlier, while those held by commercial banks fell to $3.67 billion from $3.68 billion the previous week, the central bank spokesman said.

Investment in national saving schemes up by 172pc

ISLAMABAD: During the first four months of current fiscal year, investment in national saving schemes has been increased up to 172 percent.

Overall investment during this period remained Rs 88.51 billion. A local news channel while quoting BMA Capital reported that in October, Rs 25.60 billion invested in national saving schemes while this volume remained Rs 6.89 billion during September.

US prepared to give Pakistan more help: Gates

KABUL: US Defense Secretary Robert Gates says the United States is prepared to give Pakistan more help fighting al-Qaeda forces if its government wants it.
 
Gates, who arrived in Afghanistan late Monday, said it is Pakistan’s ‘foot on the accelerator’ when it comes to fighting terrorists. But he said the US could provide more assistance ‘at any pace they are prepared to accept.’

Gates arrived with plans to assure officials and American troops there that the United States is committed to winning the war despite plans to begin pulling forces out in 2011.

Financial assistance to improve Pak economy: IMF

WASHINGTON: The financial assistance to Pakistan by IMF and other financial donors will help bring improvement in the economic condition of the country, IMF's director of external relations Caroline Atkinson said Saturday.

Speaking about Pakistan here at a press conference, Caroline Atkinson said Pakistan is receiving abundant financial assistance from different organizations which holds particular significance for its economy.

“Pakistan had faced a number of problems in the past and that is why it has earned the support of the financial institutions including IMF,” she said, adding, “This assistance will provide a push to the economy of Pakistan.”

Pakistan’s forex reserves ease to $13.72 bln

KARACHI: Pakistan’s foreign exchange reserves fell to $13.72 billion in the week that ended on November 28 from $13.90 billion the previous week, the central bank said on Thursday.

Reserves held by the State Bank of Pakistan were $10.14 billion, down from $10.27 billion a week earlier, while those held by commercial banks also fell to $3.58 billion from $3.63 billion the previous week, the central bank said in a statement.