The International Monetary Fund has given its consent to release next installment of $1.2 billion under the Standby Arrangement Loan to Pakistan. The installment has been issued on the guarantee to implement reformed General Sales Tax from October, 2010.However, a formal final decision by IMF Board is still under consideration.
The fund has also agreed to provide relaxation in the targets set for the economic growth for the year 2010-11.However, the fund’s delegation has also pointed out the failure to achieve targets set for 3rd quarter of the year. Main points of concern are as under:
– Failure to impose reformed GST
– Removal of government subsidies from electricity prices
– Limiting Government borrowings from Central bank.
The IMF officials also make it clear to the Pakistani delegation that the next installment will only be provided; subject to the achievement of goals.
The Pakistani delegation explained to the IMF officials that reformed GST implementation is delayed due to differences between the Federal government and provincial governments and also these would be resolved very soon. The IMF authorities were also intimated about the revised targets due to recent flood losses. Damages to infrastructure and economy are estimated about $5 billion causing decline in GDP growth rate.