IMF condition on subsidy: Textile Advisor causes panic among value-added exporters

Advisor to the Prime Minister on Textile Mirza Ikhtiar Baig has panicked the value-added textile millers by stating that they would never get research and development (R&D) fund and they should forget it, as the International Monetary Fund (IMF) does not allow the government to extend any subsidy to any sector in any form.
He was addressing the Executive Committee members of Lahore Chamber of Commerce and Industry (LCCI) on Wednesday on the second leg of his tour of Punjab after spending a busy day in Faisalabad on Tuesday.
"The right time to avail of the fund was back in July when former Finance Minister Naveed Qamar had announced a subsidy of Rs 12 billion and the sector preferred disputing over the amount instead of accepting it then and there," he said. The Advisor's comments panicked the much hopeful textile millers in the LCCI Executive Committee, and pointed out that the announcement was delayed for six months when the government was not in a position to extend this facility any further.
The Advisor, responding to the impression, said since he had taken charge recently, therefore, he could not disclose it earlier. However, he said he was trying to pursue the government on resumption of Duty Drawback to the exporters in place of R&D fund, which according to him, was oxygen for the export industry.
However, it was pointed out by the Business Recorder that press reports from Islamabad were suggesting contrary to what he had said categorically, as according to the press reports, the IMF had agreed on extension of the facility to the value-added sector.
Interestingly, Shaukat Tarin, when asked by this scribe in the evening at the Wapda House where he addressed a joint press conference with the Minister for Water and Power, also refrained from making any comment on no further extension of R&D fund to the value-added sector.
He said he had no idea if the IMF had made up its mind on this facility or not. The government had extended six percent R&D fund to the value-added sector back in 2005 with the termination of quota regime under the World Trade Organisation (WTO). However, former textile minister Mushtaq Cheema had extended this facility to processing (three percent) and home textile (five percent) in the 2006-07 Federal budget, which continued until 2007-08 fiscal year.
It may be noted that the textile exporters were pursuing hotly the government on extension of R&D fund for 2008-09 and Textile Minister Rana Farooq Saeed has assured them of winning their case in the Federal government by the end of December.