They said that the Fund has revised these targets for the next two quarters ending on March 31, and June 30, 2010, and it would be quantitative criterion for continuous and interrupted payments of IMF loan tranches.
Sources said that during the last session of talks between IMF and Pakistan officials, the IMF had revised some targets including NDA, NFA and budget deficit for the Pakistan for the next two quarters. NFA and budget deficit target have been enhanced, while the target of NDA has been cut by IMF, they said.
The Fund enhanced the NFA target by 2.6 billion dollars to 5.7 billion dollars for quarter ending on March 31. "As per third Letter of Intent (LoI), released in the second week of January 2010, the State Bank of Pakistan has to achieve quantities criteria of $5.7 billion NFA stocks in end-March, previously set at 3.1 billion dollars in the second LoI" they said. The NFA target for second quarter ie June 2010 has been increased to $4.9 billion dollars from 3.25 billion dollars.
However, NDA target for March and June 2010 has been cut by IMF and now SBP has to achieve the target of Rs 1.22 billion NDA ceiling in March 2010, relative to previous target of Rs 1.365 billion. Similarly, in third LoI Rs 1.32 billion quantities criterion has been set by board for June-end quarter as compared to Rs 1.41 billion in second LoI.
In addition, the IMF has increased ceiling on overall budget deficits and now it has fixed at Rs 604 billion for March quarter and Rs 740 billion for June 2010 as compared to Rs 573 billion dollars and 721 billion dollars, respectively, in the previous LoI. Sources said that Pakistani authorities have already mentioned in the Third LoI that military campaigns in Swat and South Waziristan are adding to budget outlays for security, resulting in increase in budget deficit, as the South Warizistan campaign was not anticipated at the time of the budget formulation.
They said that all quantitative performance criteria for end-September 2009 were observed, except for the budget deficit target, which was exceeded by 0.3 percent of annual GDP, and the original deficit target was missed by about 0.2 percent of GDP.
As per third LoI, structural reforms are proceeding and Pakistan remains fully committed to implement the reform agenda, although there have been delays in implementation. It may be mentioned here that IMF loan is a bailout package of 23 months and the approved loan amount, 7.6 billion dollars, is some five times higher than Pakistan's quota, while on the request of Pakistan, IMF had also enhanced its package by some 4 billion dollars in July 2009.