20000215

Govt may seek

IMF funds

under EFF

ISLAMABAD: Pakistan may seek funding from the International Monetary Fund (IMF) under its Extended Fund Facility (EFF) if the new programme, the two sides are negotiating, is delayed, official sources in the Finance Ministry said here.

Pakistan and the IMF are negotiating Poverty Reduction and Growth Facility (PRGF) which will replace the Enhanced Structural Adjustment Facility (ESAF).

However, the official sources indicated that if the new programme is delayed, the government may ask the IMF to release some funds under the EFF component of the programme.

According to the souces, the two sides are in the process of negotiations, adding no date has bene finalised yet for the visit of IMF mission to Pakistan.

IMF's technical mission was recently in Pakistan to collect necessary data regarding the new programme.

Sources also said that Pakistan has not received any funding from the IMF since last May under its $1.6 billion progrmame for the country.

Responding to a question, sources said, the programme is being prepared here.

Asked about the shape of the new PRGF Programme, they observed that "poverty is now part of the programme, while in the previous programmes it was in the peripheral area."

"To reduce incidence of poverty, we will place before the Fund, the government's target of growth, and investment target and will then asked them their plan," the sources said.

This will be complex programme, the sources said while adding, "Pakistan will be the first hard case."

In fact, they maintained, Pakistan is already pre-positioned on the poverty issue as the government has placed the poverty alleviation among its top priorities.

Responding to a question, they said, country's foreign exchange reserves are stable at around $1.5 billion, which is without any external assistance. "The reserves are purely due to our own economic efforts," said sources.

To another question, sources described the debt as the major problem facing the country. "Every effort will end up result-less if we fail to reduce our debt.

The Debt Management Committee, under Dr. Pervez Hassan has already started its work to prepare a strategy to cut down country's huge debt burden.

"We are working on it and the international donors namely, Asian Development Bank and the World Bank are impressed with our pace of work," the sources said.

To a question, they said, the government is expecting to retire up to 25 percent of the debt through the proceeds of privatisation.

"If we are able to do that, it can provide the government the fiscal space of around Rs. 75 billion," the sources said adding, one can easily gauge the benefits if such a big fiscal space is available to the government.ÑAPP