Fund assured of taking corrective revenue steps

The government has assured the International Monitory Fund's (IMF) team of taking revenue measures including imposition of 15 percent flood surcharge and 1.5 percent additional special excise duty (SED). Sources said during the technical level talks, official of finance ministry and FBR shared data with the IMF on fiscal, external and macro-economic frameworks and assured them of taking corrective revenue measures.
An official on condition of anonymity said that robust growth in exports and remittances have provided considerable support to the current account and abated dependency on foreign inflows on short-term basis.
The current account, which was expected to be in negative by 5 billion dollars for the current fiscal year, has remained only 81 million dollars negative in seven months. Even in the worst case scenario, officials are optimistic that it would remain within 2.5 billion dollars negative because of $10 billion remittances against the budgetary estimate of $8.5 billion and exports estimated to go over $22 billion for both increase in quantity and price per unit. Another positive aspect was that the oil import would remain well short of budgetary estimate of 58 million metric tons for the current fiscal year. The first eight months figures show that total oil import was only 28 million metric tons. The increase in oil in the international market is likely to be adjusted in the expected less quantity of oil import.
Official said that macro-economic indicators are also improving and seven months GDP growth is around 2.7 per cent. The agriculture growth, which was expected to remain 1 per cent negative, is likely to remain 0.7 per cent negative because of healthy sugarcane and wheat crops. The inflation would remain around 15 per cent for the current fiscal year. During the talk, the sources said Pakistan side has requested the IMF to give them performance targets for end March 2011 to comply with and completion of 5th review under Stand-By-Programme (SBA) to qualify for the next tranche of 1.7 billion dollars before the upcoming budget as well as for letter of comfort. Official said provincial finance secretaries' meeting would be held today (Monday) to discuss the implementation of NFC award as well as budget surplus from them to contain the fiscal deficit.