IMF raises questions on SIFC creation

ISLAMABAD: The International Monetary Fund (IMF) has advised Pakistan against creating a group of preferred investors or distortions in the country under the Special Investment Facilitation Council (SIFC) and to ensure transparency and accountability in its business deals.

Deputy Chairman Planning Commission Dr Jehanzeb Khan told economists and journalists that the visiting fund mission had raised questions as to the need for creation of another institution like SIFC and whether this would lead to the distressed sale of assets and advised against preferred investors

They want that “transparency and accountability should be above board” in these matters.

He said the implementation of the IMF programme was in the interest of the country and there was now no difficulty with IMF advice for improved taxation on the rich because the people had already absorbed the full burden of the programme and the backlog and should now only lead towards ease from here onwards.

He said the problem in the past was because of delays or partial implementation of the needed adjustments. He said the IMF team was satisfied with the SIFC briefing and explanations.

Responding to a question, he said administrative measures against hoarding of foreign exchange and speculative pricing because of cross-border movement had helped a great deal in finding the real value of the rupee given the imperfect markets. However, he said there had been no interference in the exchange rate.

Civil-military platform cautioned against favouring certain investors

Informed sources said the IMF and the Pakistan authorities had covered most of the areas during policy-level discussions and there was a problem area left out.

The two sides are reported to have had back-and-forth clarifications on Tuesday on finalisation of the Memorandum of Economic and Financial Policies (MEFP) and were expecting to conclude the talks on a positive note on Wednesday.

The IMF staff mission would then present Pakistan’s case to the executive board for approval of the successful conclusion of the first quarterly review under the nine-month $3bn Standby Arrangement signed in July. This would enable Pakistan to receive $710 million second tranche early next month.

On the sidelines, the federal cabinet on Wednesday is expected to impose a windfall tax on banks on the basis of their unprecedented earnings on account of volatile foreign exchange business last year.