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Crucial talks with IMF next week: Shaukat

ISLAMABAD: Pakistan's Finance Minister Shaukat Aziz said on Thursday that crucial negotiations with a review mission from the International Monetary Fund were due to start next week in Islamabad.

Aziz told Reuters in an interview that talks with the IMF team headed by Sena Eken, assistant director for the Middle Eastern region, for a "broader and larger" programme were due to start on Monday.

His remarks were in contrast to Pakistan's military ruler General Pervez Musharraf's statement in the Malaysian capital on Tuesday in which Musharraf said he expected negotiations with the IMF to resume in June.

"Negotiations will start on Monday over here (Islamabad), but what he (Musharraf) meant was that the new programme will be in place by the next financial year," Aziz said.

Aziz said he would lead a Pakistani delegation to Washington after meeting the IMF team in Islamabad to attend interim meetings of the IMF and the World Bank in mid-April.

"We hope that this mission will have a proper review of the economic revival plan and their normal due diligence... And this is my earnest hope, that by the end of this financial year, we will have a new broader, larger IMF programme in place," he said.

Time is running out for Pakistan to strengthen its balance of payments positions because last year's rescheduling of payments of more than $4 billion it owed to bilateral, commercial and private lenders, ends in January 2001.

"Our financing plan, between now and the end of the financial year (in June) looks satisfactory," Aziz said.

"But we do need to have the fund programme in place by the end of this financial year because the issue is not just keeping a satisfactory level of reserves. The issue is the ability to attract foreign and domestic savings to grow the economy."

Aziz said once an IMF programme was in place, the World Bank and the Asian Development Bank could get more involved in the country, leading to interest in Pakistan by commercial investors.

Shaukat did not say that the IMF's stalled $1.56 billion programme was officially over but explained that the meetings with the IMF team would focus on a new programme.

"A new programme is essential because the policy priorities of the government and the implementation framework has changed."

HUBCO TALKS ON FRIDAY

Aziz also said Pakistan's military-led government would hold its first direct talks with Hub Power Co (Hubco) and World Bank officials on Friday to try to settle a lingering tariff dispute which has hurt investment.

"We will have the first video conference tomorrow night, which will be participated by the board of Hubco, senior representatives of the World Bank, myself and General Zulfikar Ali Khan to try to put our negotiations back on (track)," he said. General Zulfikar is chairman of state utility WAPDA.

"The major issue on Hubco is tariff negotiation and our view is that all stake holders should put something on the table... and settle the issue commercially, rather than settling it through legal means," Aziz said.

The row with Hubco and other independent power producers has badly damaged Pakistan's investment image, besides straining relations with the IMF and the World Bank.

The World Bank has $500 million worth of guarantees in Hubco's 1,299-megawatt thermal power plant on the edge of Karachi.

"We believe that this start of fresh negotiations, which is the first time we are doing since the government came in power, will be a step in the right direction. I personally, cautiously, remain optimistic," Aziz said. The military government came to power on October 12 when then prime minister Nawaz Sharif was toppled in a bloodless coup.-Reuters