Press Release No. 10/417

Press Release No. 10/417
November 5, 2010

An International Monetary Fund (IMF) staff mission, led by Adnan Mazarei, met with the Pakistani authorities in Islamabad to continue discussions on the fifth review under Pakistan’s Stand-By Arrangement (SBA). Mr. Mazarei made the following statement at the conclusion of the mission today:

“Over the past few days, an IMF staff mission and the Pakistani authorities had constructive discussions which focused on assessing the impact of the floods on Pakistan’s economy, adjusting economic policies to respond effectively to the needs created by the floods, and on the outlook for the rest of the financial year 2010/11.¹

“Progress has been made regarding the measures to be implemented in the context of the authorities’ economic stabilization and reform agenda, while protecting the poor. Specifically, we have reached broad agreement on the macroeconomic framework and a revised 2010/11 budget deficit target to help flood victims, and rein in inflation, which hurts the poor most. The authorities consider that the reformed general sales tax is essential to raise revenue to finance relief for flood victims, poverty reduction, and infrastructure reconstruction. Tax reform is also needed to make the tax system more equitable. The authorities recognize the critical importance of energy sector reform. They have initiated reforms aimed at reducing load shedding, which is severely hurting economic activity; curtailing energy subsidies in order to free up budget resources for spending in priority areas; and resolving the issue of circular debt.

“The IMF remains committed to the ongoing dialogue with the Pakistani authorities, and discussions will continue including around the Pakistan Development Forum to support Pakistan’s efforts to strengthen macroeconomic stability and growth and completing the fifth SBA review.”

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¹ Pakistan’s financial year runs from July 1 to June 30.