IMF demands information on stock market, NSS, Nepra tariff

[Naveed Yaseen]

MUSHTAQ GHUMMAN
ISLAMABAD (June 30 2009): The International Monetary Fund (IMF), which is to quiz Pakistan's economic managers, led by Advisor to Prime Minister on Finance, Shaukat Tarin, on July 3, 2009, in Istanbul, has sought detailed information on the amount used by the public fund (NIT)-SEF for interventions in the stock market, their impact, stocks holdings by foreigners of shares listed on the Karachi Stock Exchange (KSE), and status of reforms of broker financing (badla), official sources told Business Recorder.

IMF had restricted the government from lifting the stock exchange 'floor' or from providing any financial support to the bourse, without prior approval of the Fund. Last November, IMF had approved a $7.6 billion bailout package and imposed tough conditions designed to bring economic stability and save Pakistan from a balance of payments crisis.

The negotiators from Pakistan side still hold the same position, with the exception of the then Governor of State Bank of Pakistan whose contract was not renewed by the government. In this regard, completion of second review under the Standby Arrangement is scheduled to take place from July 3, 2009, during which Tokyo Package would also come under discussion. Under IMF scrutiny, Pakistan has targeted an increase in its fiscal deficit to 4.9 percent of GDP for 2009-10, from the 4.3 percent originally agreed to in 2008-09.

Sources said that names of main buyers of T-bills; amounts sold and cut-off rates of the outgoing fiscal year; currency composition of the SBP's foreign assets and its liabilities as of end June 2007, end June 2008, end May 2008; and government deposits in banks and non-bank financial institutions have been requested by the IMF.

Sources said that IMF's resident mission has also requested the Finance Ministry to provide data of Central Directorate of National Savings (CDNS) on debt stock by National Saving Schemes (NSS) instrument, prize bonds and PLI, SBP data on permanent debt and floating debt by instrument, AGPR data on debts stocks related to the GP Fund and public account deposits and SBP's data on government deposits with the non-banking financial institutions (NBFIs).

Pakistan is also asking for $4 billion additional funding from the IMF as insurance, if commitments made by the Friends of Democratic Pakistan (FoDP) do not materialise as per optimistic expectations. With regard to electricity, sources said, the IMF has sought detailed calculation of the debt service included in 2009-10 budget for the assumed electricity sector debt, and a note on the institutional set-up of the state-owned entity that is supposed to assume the power sector debt.

Sources said that IMF has set a condition that the government must lay out a plan for auditing electricity sector debt before it will be assumed by the government. According to sources, the government will also provide a schedule to the IMF mission about the drafting and submission to the Parliament of the amendments to the National Electric Power Regulatory Authority (Nepra) Act that are necessary to ensure regular automatic electricity tariff adjustments based on Nepra calculations.

With regard to privatisation, sources said, the Finance Ministry would provide up-to-date list of companies in the privatisation pipeline and explain the projections for the privatisation proceeds in the 2009-10 budget. Sources said that IMF has also requested for details on trends in poverty ratio since last comprehensive survey 2004-05 and roll-out of Benazir Income Support Fund (BISF) and actual expenditures in 2008-09 for BISF, Bait-ul-Maal and Pakistan Poverty Alleviation Fund (PPAF).

"What share of the BISP expenditures in 2009-10 (Rs 70 billion) is expected to be executed under the new targeting system (scorecard) and what share through the existing channels (Members of the Parliament). By when would you expect the screening of the existing stock of beneficiaries based on the scoreboard system to be finished," sources quoted IMF resident office as requesting in the questionnaire sent to the Finance Ministry.

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