May 16, 2011

Pakistan-IMF Loan Talks Unperturbed By Scandal

Khaleej Times
written by Muzaffar Rizvi
Tuesday May 17, 2011

DUBAI — Pakistan will conclude its talks with the International Monetary Fund, or IMF, over the release of a tranche in an $11 billion loan by Thursday, sources said on Monday.

“Negotiations are going smoothly and on track to conclude by May 19. Talks are unaffected by the arrest of IMF Managing Director Dominique Strauss-Kahn,” a senior government official told Khaleej Times.

Strauss-Kahn was due to make his first appearance in court on Monday since being charged with trying to rape a hotel maid in a case that sent shockwaves through French politics and left the IMF in turmoil.

It also overshadowed the eurozone finance ministers meeting in Brussels yesterday as the Strauss-Kahn was scheduled to be part of the talks being held to bailout Portugal and Greece.

“We are holding the talks with the IMF team and are optimistic to conclude on positive note by Thursday,” the official seeking annonymity said.

Federal Board of Revenue Chairman Salman Siddique is leading the Pakistan delegation, which also involves Secretary Planning and Development Ashraf Hayyat.

“The Deputy Chairman of Planning Commission Nadeem ul Haque is also expected to join the delegation today,” the official said.

Sources in the finance ministry said that the sixth tranche of $1.7 billion out of $11.3 billion standby arrangement programme with the IMF was likely to be released during the fiscal year 2011-12 after the finalisation of a report by its review mission.

The IMF mission was meant to discuss budget targets for the fiscal year 2011-12 and to review economic and policy developments under the standby arrangement. The remaining two remaining tranches of about $3 billion under the programme is critical to help Islamabad through a financial crunch due to a widening fiscal deficit.

The IMF team expressed concern over non-implementation of reform measures to discipline the economy and high government subsidies. The mission also wanted an assurance from the government side for implementation of Reformed General Sales Tax in the new financial year starting from July.

Pakistan agreed to an IMF loan programme in November 2008 to avert a financial crisis. So far, about $8 billion of the loan has been disbursed, while an additional $451 million in funding has since been authorised to cope with damage caused by the summer floods in 2010.

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