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IMF delegation to arrive in Pakistan

ISLAMABAD — A 4-member IMF mission is arriving here on August 15 to discuss Pakistan's state of the economy with special reference to help increasing its Foreign Direct Investment (FDI).

Official sources said that the mission to be headed by IMF's Middle East Department Mohsin Khan would remain the capital for one week during which it would also call on President Pervez Musharraf and Prime Minister Shaukat Aziz.

However, sources said that IMF has asked Pakistan to maintain internal and external stability with a view to ensuring 7 per cent plus GDP growth rate in 2005-06 and beyond.

While IMF has praised the increase in the private national savings from a low of about 18 per cent to 23 per cent, it also wanted the government to make more efforts for fiscal consolidation and accelerating structural reforms in all the major sectors of the economy.

These reforms were aimed at increasing efficiency, including through privatization, transparency, good governance and generally improving the business environment in the country.

Sources said that these issues would come up for detailed discussion when an IMF review mission arrived here for consultations under article IV.

The IMF believed that the resumption of growth was especially impressive when viewed in the context of the substantial macroeconomic adjustment took place in the country. According to the Fund officials the increase in the private national savings was the key contributor to the turnaround in the external current account during 2001-2003. Also, a surge in the net private transfers from abroad, enhanced by post-September 11 portfolio shift by Pakistanis to the home country contributed to increased national savings. Over the past few years, Pakistan has returned to a relatively high growth, which was estimated to have accelerated to more than 6 per cent for fiscal year 2003-04.

This turnaround, according to the IMF, followed three years of steady decline in growth during 1998-99 through 2000-01. Even in per capita terms, growth has been robust in recent years. Per capita income in US$ is estimated to have reached $652 in 2003-04, compared to $501 in 2000-01. The government officials, however, claimed that the per capita income has risen from $657 to $736 in 2004-05 and that per capita income defined as Gross National Product (GNP) at market price in Dollar term divided by the country's population, grew by an average rate of 13.5 per cent per annum during the last three years.

"Although we have decided not to seek any new loaning facility from the IMF, consultations with the Fund officials will certainly help us to further improve our economy", a source in the Economic Affairs Division (EAD) said. He said IMF had to face mounting criticism when the world witnessed the East Asian crisis in 1997 and it was in that backdrop it was decided that the Fund would make more efforts to help improve the economy of its member countries.