ISLAMABAD-Pakistan and International Monetary Fund (IMF)on Friday concluded the policy dialogue, as Islamabad assured the international donor to reduce the soaring fiscal deficit in the current fiscal year through expenditures restraint and tax policy and enforcement measures to mobilise the additional revenue. 'Discussions on economic stabilisation focussed on addressing inflation, containing the budget deficit, reviving growth, and meeting the challenge posed by higher international oil prices. There was agreement on the need to reduce the budget deficit in the current financial year. The mission welcomed the recent expenditure restraint and tax policy and enforcement measures being considered by the government to mobilise additional revenue. These measures, if implemented promptly and consistently, will help to improve the budgetary position. The mission also welcomed the governments efforts to lower recourse to State Bank of Pakistan (SBP) borrowing since late-December, IMFs statement stated. 'The IMF mission held constructive discussions with government and central bank officials on the recent developments, the outlook for Pakistans economy for the rest of ongoing fiscal year 2010-11 and coming fiscal year 2011-12, and on economic policies to restore macroeconomic stability in the context of the improved external current account and international reserves. We also discussed structural reforms to strengthen public finances and the financial sector, said the official statement. An International Monetary Fund (IMF) mission, led by Adnan Mazarei visited Islamabad during March 1-11 and held meetings with Pakistani side, which was headed by Finance Minister Abdul Hafeez Shaikh. It is pertinent to mention here that government of Pakistan assured the IMF that it would introduce additional revenue generation measures from April, which would generate Rs 26 billion in three months period. Meanwhile, the Pakistan govt also agreed to increase the power tariff by two per cent in order to reduce the subsidies on power sector. According to the IMF, a binding agreement would be needed with provinces on their budgetary positions to assure attainment of the deficit target. However, the IMF showed concerns over the large domestic borrowing needs and said that Ministry of Finance needs to improve debt management. 'Looking ahead, significant fiscal consolidation will be needed in 2011/12 in order to reduce inflation and ensure debt sustainability. The lower budget deficit would also help manage the impact of higher oil prices on the economy, the IMF said. 'The budget deficit and quasi-fiscal operations have contributed to a loosening of monetary conditions thus adding to inflationary pressures. To help counter these pressures, credit to the budget from the SBP should be reduced further. Moreover, the banking sector needs careful monitoring, given the high and rising level of non-performing loans. 'Further, to lay the basis for higher and broad-based economic growth, tax reforms, reduction of poorly targeted subsidies, and financial sector reforms are needed to improve governance and promote higher savings, investment and growth, it added. 'The IMF remains committed to the ongoing dialogue with the Pakistani authorities, and will continue discussions on their reform program. Meanwhile, sources told that IMF mission would visit Pakistan in May for the fifth economic review in on order to release one of the remaining tranche of the standby loan programme.