Pakistan will receive $2.3 billion from US and other donors before end of June, Advisor to Prime Minister on Finance Shaukat Tarin told a news conference here on Friday. Giving details of his meetings at Japan, Libya, US and with International Monetary Fund (IMF) at Dubai, he said.
The World Bank, Asian Development Bank, and US would release $600 million, $800 million and $900 million respectively, whereas International Development Bank (IDB) will give $23 million. He said that Pakistan's delegation had convinced the IMF during the review of March quarter in Dubai for allowing an increase in fiscal deficit by next fiscal year.
This fiscal space was required owing to decline in revenue on account of negative growth by large-scale manufacturing (LSM) and shrinking import as both contributed 60 percent and 40 percent respectively to the revenue. He said that the IMF allowed increment in fiscal deficit by 1.2 percent (from 3.4 to 4.6 percent in the next fiscal year) which would enable Pakistan to use Rs 180 billion as a short-term measure to increase industrial productivity.
He said that IMF was told that Friends of Pakistan (FoP) pledges would not cater Pakistan's urgent need of short-term growth and this could only be possible through increase in fiscal deficit. The advisor said that IMF was satisfied with performance of Pakistan economy and would soon release $840 million tranche.The board meeting in mid-June will recommend release of the tranche, he said, adding that Pakistan budget figures for next fiscal year were also discussed in the Dubai meeting.
The advisor said Pakistan would seek stand-by facility of $4.5 billion for next three years and the IMF had agreed to this facility for both fiscal space and balance of payments. "We will use this facility in case delayed assistance from FOP."
Tarin said Pakistan received encouraging response from FOP in Tokyo and pledges of $5.28 billion were made against $4 billion gap. Giving details, Advisor said that $600 million was pledged as grantsoft loans and $400 million for budgetary support, whereas $4.3 billion would be for projects financing.
He said that Britain, Norway and Switzerland would also increase their annual aid to Pakistan. The FOP assistance would be used for cash support and poverty reduction, skill development, medical insurance for poor and job creation at tehsil level. Remaining assistance would be used for education and health sectors development, he added.
He said that during FOP meeting talks on security were held and a plan was presented involving $10 billion for setting up special force to counter insurgency. "We have also proposed setting up a trust fund of Rs 2 billion for NWFP and Balochistan and pledges in this regard are expected to be made at next meeting of FOP in Turkey."
The advisor said that Pakistan would need $800 million for the settlement of internally displaced persons (IDPs) in three phases and Donor's Conference is scheduled on next Thursday at Islamabad. He said a special allocation would be made for the IDPs in the 2009-10 budget.
He said that World Bank and Asian Development Bank have agreed to increase Pakistan's financial assistance from next year and wanted the WB help in agriculture and infrastructure sectors particularly. "We have informed FODP member countries that Pakistan has already suffered losses to the tune of $35 billion in eight years due to war on terror and to win this war Pakistan would require immediate help" added Tarin.
Immediate market access would be a best option for helping Pakistan as its economic indicators are exhibiting negative growth due to war against terrorism. Tarin said that Pakistan is expecting $1.5 billion coalition support from United States in next two months. POL prices would be lowered in one week on the directions of Supreme Court.
Sharing details of President's visit to Libya, Tarin said both countries agreed to enter into Strategic Economic Partnership under which Pakistan would give them manpower, help in infrastructure and banking sector and invited Libyan companies to invest in oil and gas sector of Pakistan. He said that Pak-Libya Holding Company would pursue co-operation in these areas. He said President's visit to the US was also successful as the latter had agreed on talks on Free Trade Agreement (FTA).
Tarin said that the government would take decision on petroleum prices within a week. He said that it would be possible to run the country on petroleum development levy (PDL) next year as the oil prices were going up. He said that the PDL procedure would be made transparent in the next budget. The advisor admitted that food inflation should had been at 15 percent by now instead of 17 percent and he had requested the Prime Minister to take up the issue of prices during his meeting with the Chief Ministers as price control was a provincial subject.
He said that new FBR boss would take all stakeholders on board and take reforms process ahead. He cautioned that officers who want to avail leave (as protest on appointment of non-tax man as new chairman) should keep in mind that their seats could be declared vacant. About upcoming budget, he said focus would be on revenue generation for poverty reduction, promotion of agriculture, manufacturing, energy sector and infrastructure development.