950816

Mukhtar accepts

cropping up of minor

irritants with IMF

DUBAI: Pakistan Commerce Minister Ch Ahmed Mukhtar, has said that it was not possible for the government to reduce the tariff to 55 percent in 1995-96 and the deficit target of 4 percent of the GDP.

In an interview with the UAE Daily Khaleej Times, he admitted that some minor irritants between the Pakistan government and the International Monetary Fund (IMF) had cropped up, but added these would be removed when the fund's mission visits Islamabad next month to discuss Pakistan's new budgetary proposals.

He dispelled the impression that foreign banks would be hesitant to lend finances to Pakistani exporters in view of the IMF decision not to offer the third tranche of $300 million to Islamabad after it failed to implement certain conditions.

"Apparently there is no reason why the IMF would withhold the third tranche but even if it does so, our exporters could receive money from the foreign banks because of their great potential to pay back", he maintained.

Ch Mukhtar said that since the country's reserves were over $2.8 billion, Pakistan does not need the third instalment of $300 million from the IMF.

According to reports, the IMF is said to have expressed its strong reservations about the new budgetary proposals in which deficit target was kept at 5 percent of GDP instead of 4 percent as was agreed between the two sides. The fund has also objected to have tariffs reduced to 65 percent against the agreed 55 percent.

The minister did not believe that Pakistan would have to devalue its currency, as a result of allowing Pakistani exporters to borrow money from foreign banks.

Ch Mukhtar said that there will be total imports of $10.9 billion during current fiscal year 1995-96 as against the projected $10.1 billion during 1994-95.

He was confident that the all time high $9.2 billion exports target for fiscal 1995-96 will definitely be achieved specially in view of the fact that exporters have been offered unprecedented incentives in the new trade policy.

"For us the target of $9.2 billion seems to be quite achievable and the main reason for this optimism is that we have allowed the exporters for the first time to borrow directly from foreign banks," he stressed.

He explained that the offshore borrowing for exporters was aimed at increasing the overall growth rate. He pointed out that policy of allowing foreign borrowing was prevalent in some countries including India and Indonesia. "Currently we are working out details about it which will be announced shortly", he added.-PPI