Dates for talks with IMF not yet finalised

The proposed dates for talks between the International Monetary Fund (IMF) and the government of Pakistan, widely reported for this week, have not yet been finalised, according to sources close to IMF. Secretary, Finance, Dr Waqar Masood Khan, while talking to Business Recorder, stated that IMF team would be visiting Pakistan this week.
Sources said that the release of the second (last) tranche under the Stand-By Arrangement (SBA), estimated at 1.7 billion dollars, is contingent on progress in implementing agreed policy reforms designed to restore macroeconomic stability and effective structural reforms. A key component of the agreed reform agenda is implementation of the value-added tax, or the proposed ''reformed general sales tax'' (RGST) which the government has so far failed to comply with.
At present, it is considered highly unlikely that the government would succeed in building up political consensus to implement the ''RGST'' before talks with the IMF team.
A senior Ministry of Finance official said: "We have prepared a plan that would be discussed with the IMF during the forthcoming talks. This consists of three options." But he refused to divulge the three options, though he did maintain that the PML (N) had agreed to these three options. The PML-N in its ten-point agenda has supported measures designed to reduce the burgeoning budget deficit through eliminating exemptions as well as reducing expenditure by 30 percent: IMF''s over arching objective.
Murilo Portugal, Deputy Managing Director, IMF is on record as having stated in May 2010 during the Fourth Review under SBA that "the (Pakistan) authorities reaffirmed their commitment to proceed with legal and administrative steps to ensure that the VAT is introduced on July 1 as scheduled, providing the needed tax revenue for investments in human resources, infrastructure, and poverty reduction. Its success depends crucially on prompt passage of consistent VAT laws by parliament and provincial assemblies, harmonisation of other tax laws, and an effective refund system". The government is under considerable pressure from the international community, as defined by multilateral institutions and bilateral donors, to comply with the conditions agreed under the SBA if it expects to receive foreign assistance.