Pakistan to seek additional funding from IMF: Tarin

[Naveed Yaseen]

ZAHEER ABBASI
ISLAMABAD (February 20 2009): Advisor to Prime Minister on Finance Shaukat Tarin has said that Pakistan will seek additional funding from the International Monetary Fund (IMF) when they would meet in April. Talking to newsmen after the launching of Medium-Term Budget Framework (MTBF) here on Thursday, the advisor said that he would ask for enhancing quota to eight times from the existing five times in the spring meeting to be held in the US.

Many countries get seven to eight times quota from the IMF and that an increase in quota could help Pakistan strengthen its foreign exchange reserves. To a question about ongoing talks with the IMF in Dubai, he said that negotiations were heading in the right direction and everything would be settled in the next few days.

"The IMF is satisfied with the Pakistan's economic performance," Tarin said, adding: "We will not seek waiver from the IMF because of revenue shortfall." The advisor admitted that there was pressure on revenue side, but dismissed the notion that there was a shortfall of Rs 100 billion in the Federal Board of Revenue (FBR) collection target.

He said they would be seeking some space from the IMF not for revenue shortfall but for social sector. "I have suggested the US to pay 100 million dollars every month and the rest of the 50 million dollars should be released on the settlement of account differential, if there is any. "They have liked my proposal and, hopefully, Pakistan would get 100 million dollars every month for its contributions on war against terror, which has ruined the economy and made Pakistan a sufferer," he said.

"War on terror has damaged Pakistan's economy to the extent that no one is ready to come to Pakistan and all the deals are being done either by sitting in Singapore or Dubai," he said, adding that even the IMF team was holding negotiations from Dubai. Tarin said he would ask the friends to help Pakistan recover from the economic suffering by giving market access, debt swap and extending oil facility as Pakistan was fighting their war as well.

To another question about circular debt, the advisor said the government would be launching Rs 100 billion Term Financing Certificate (TFC) in a couple of days to clear the circular debt of Rs 160 billion. Water and Power Development Authority (Wapda) would be asked to generate its own revenue to clear the rest of Rs 60 billion from circular debt. He said that a permanent solution was the privatisation of the power utility.

Earlier, speaking at the MTBF launch workshop, Tarin said that the new budgetary system would not only ensure participation of parliament and other stakeholders, but the Cabinet and Chief Executive would also be evaluating performance of each and every ministry.

The MTBF system of budget making would promote efficiency and effectiveness in the allocation and use of public sector resources. The two main features of MTBF are that it involves multi-year approach of budgeting and also enables the government to align spending plans with the resources available to government. "The government priority is to give relief to the poor and allocate more funds for development projects," he said, and added that adoption of MTBF would help bring this change.

Additional Finance Secretary Ayub Tarin, who spoke on behalf of Secretary, who is currently out of the country, said the MTBF would reduce wastage of public funds. Former Finance Secretary Moeen Afzal, speaking on the occasion, said the current system of budget preparation in Pakistan was inefficient and ineffective and the MTBF was designed to bring about efficiency as well as improving sectoral allocations.

Moeen said the new system would greatly empower the ministries. "They will have an indicative budget ceiling within which to submit budget proposals, and because they will know roughly what resources are available to them over a multi-year period, they will be better able to plan for service delivery over the medium term. The ministries will have greater autonomy to decide how to allocate resources within their respective sectors," he said.

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