The IMF has not approved any relaxation in the fiscal deficit target, says Jeffrey Franks, outgoing mission chief for Pakistan,. “The target remains at 4.9 per cent for this fiscal year.”
The government has been gearing up for a relaxation of this target, with Finance Minister Ishaq Dar arguing that the National Action Plan (NAP) and rehabilitation of IDPs are going to put a severe strain on the budget. In January he was quoted as saying the fiscal requirements under NAP and IDPs could be as high as Rs100 billion, which would make it necessary to revise the deficit target to 5.3pc.
In remarks to the press just before joining the negotiations in Dubai, he reiterated that the fiscal deficit target as it stands will need to be revised upwards due to expenditures connected with implementation of the NAP.
“We have had discussions about the NAP,” says Franks, confirming that the matter of expenditure increases was indeed raised by the Pakistan delegation.
“We understand that there is a legitimate need for expenditure increases” due to the military operation and handling of the IDPs, “but there has been no final decision on change of fiscal deficit target. We will be discussing this further with the government in the coming weeks and months,” he says, declining to add further details on the nature and quantum of the expenditure increases being sought by the government. “These are ongoing discussions,” he says when asked for details.
The sixth review of Pakistan’s programme with the IMF has just concluded in Dubai. Disbursement of the funds will only come once the staff assessment has been approved by the board.
