Economic outlook: government doesn''t agree to IMF perspective: minister

Minister of State for Finance Khawaja Sheraz said on Wednesday that the government did not agree to International Monetary Fund (IMF) perspective on economic outlook of Pakistan. Responding to a call-attention notice moved by Pakistan Muslim League (N) parliamentarians on the recent IMF views, the minister said the government completely differed with the viewpoint of the lending body.
He said the implementation of the Reformed General Sales Tax (RGST) and the issue of circular debt were the major reasons behind unsuccessful completion of the IMF programme, as the government was not able to meet those conditions. However, he did not elaborate on the slippages on fiscal side and government''s failure to ensure passage of SBP law in accordance with the timeline agreed with the Fund to curb the unrelenting borrowing from the Central Bank as well as to fulfil the condition of a single treasury account.
The minister told the Parliament only half truth about what led to government''s failure to complete the Stand-By Arrangement (SBA) of the IMF and stated that except for RGST and subsidies all the other agreed performance actions with the fund were fulfilled.
He said the government would repay the upcoming first instalment of US $1.2 billion of the IMF and it would not have any adverse impact on the country''s foreign exchange reserves, which he predicted would remain stable at the level of $16 billion even after the payment to the Fund. Pakistan, he said, had not received reimbursement of $2.5 billion from Coalition Support Fund. The country has been fighting war on terror through its own resources, according to him.
The minister said inflation had decreased lately and would show a similar trend in coming months. Revenue mobilisation by the Federal Board of Revenue had increased by 27 percent in the first six months of the current fiscal year compared to the same period last year largely because of increase in tax base.
Replying to a question about the IMF concerns that measures taken by the State Bank of Pakistan to stabilise the exchange rate had caused a $2 billion loss to foreign exchange reserves of the country, he said that steps taken by the SBP to stabilise the exchange rate were inappropriate and a total open market could not be allowed in the absence of proper regulatory checks and balances.