ISLAMABAD Value Added Tax imposition is a hard and fast condition of the World Bank as its Country Manager in Pakistan John Wall suggested mobilisation of resources and stopping drainage of funds into the state-owned entities. Wall who assumed charge on Wednesday as the Country Manager talking to a selected group of journalists on Wednesday said, I am optimistic that the current economic situation will get much better. But it should not be left to an automated pilot, he rushed to add. It needs close watch on both monetary as well as fiscal side. Answering a question about possible delays in imposition of the Value Added Tax he said, we would continue with the assistance to Pakistan as long as there are enough reasons to believe that it (VAT) would be implemented. He attributed the current economic situation in Pakistan to high international oil and agricultural commodity prices, which enhanced the import bill of the country. He said that low interest rates are necessary for the growth of business activities in the country. But the monetary policy needs to be tightened timely if the economy gets overheated as happened in 2005. Thus, he stressed the need for low inflation and low current account deficit besides creating fiscal space for expenditure in social sector development. Asked how the Government should curtail its expenditures, he said, a mammoth amount of Rs 3.5 trillion was stuck-up in throw-forward head of a variety of projects lingering at any stage much before completion. Pakistan should seek market access and duty free exports the Organization for Economic Cooperation and Development (OECD) countries for a competitive export regime, he recommended. Regarding implementation of Value Added Tax (VAT), he said, it was not just tax mobilisation but it would provide documentation of the economy and broaden the tax base. A lot of countries have implemented the VAT in their respective countries, he remarked. He also recommended that the Government should come up with a clear policy for promotion of small hydel power projects by the private sector. Private investments in power sector especially in hydropower were essential to generate low cost electricity. He also called for improving the efficiency and workings of the state owned enterprises like PIA, Pakistan Railways to improve their performance in terms of profit and services. According to the World Banks Country Manager, the line losses and power tariff were directly linked, therefore, the Government should try to reduce them. Answering a question, he said that the World Bank was open for extending loans to the Diamer-Basha Dam to Pakistan but with certain conditions. He said the Bank had already committed funding for Dasu Dam project.