MF to release $850 million next tranche this month

Wednesday, 01 July 2009 10:18

Economic Updates - Pak Major Financial News

KARACHI - The federal government and the International Monetary Fund (IMF) are holding important meetings on Friday in Turkey to discuss the new budget, elimination of subsidies, the status of disbursement of next tranche and provision of the CFS for the stock market, The Nation learnt.

Official sources said the fund is expected to disburse the next tranche of $850 million in July after the completion of talks in Istanbul, Turkey on Friday.

To meet the IMF requirements, the government has started phasing out subsidies on oil and electricity that would pave way for the release of next tranche of loan from the fund, said sources.

Adviser to Prime Minister on Finance Shaukat Tarin would lead the Pakistan’s economic team in talks with the IMF.

They said, during the meeting, the government and the IMF would also discuss government’s debt instruments, inter-corporate debt of power companies, over all liquidity situation and capitalization of the money market and government deposits in banks and non-banking financial institutions.

However, Pakistan’s economic managers would look for the appropriate cut in interest rate in the upcoming monetary policy owing to the current comfortable situation which would ease IMF concerns regarding imbalances and help SBP officials to convince IMF for further rate cuts in the next policy review.

The Fund would ask about the amount used by the public fund (NIT)-SEF for interventions in the stock market, their impact, stocks holdings by foreigners of shares listed on the Karachi Stock Exchange (KSE), and status of reforms of broker financing (badla).

As anticipated, the FY10 budget has been chalked out on a theme to stimulate the flattering domestic economy while remaining within the confines of the IMF program conditionalities. It must be recalled that the International Monetary Fund was set to review Pakistan’s economic performance at a meeting in Dubai on June 28, 2009.

Courtesy: The Nations