LAHORE - The International Monetary Fund (IMF) on Wednesday said that its financial assistance programme was not aimed at intervention in microeconomic management but to help restore macroeconomic balance of the country. "We are here not to dictate the government rather to assist it and we have never asked the government to do this or that. It is up to the government as to which policies it adopts and how does it put into action. Our task is only to help it in executing its plans and programmes as the government has set its own target." Masood Ahmed, director for Middle East and Central Asia Development (MCD) IMF Washington DC flanked by Paul S Ross, resident representative IMF Islamabad, said this while talking to The Nation here on Thursday. He made it clear that this programme was "totally home-based and home-grown" rather than of the IMF. It was aimed at achieving the key objectives of restoring macroeconomic stability and confidence through the tightening of macroeconomic policies and ensuring social stability and adequate support for the poor and others who were vulnerable in Pakistan, he maintained. According to him, the main objectives of the programme included a significant reduction in fiscal deficit, eliminating the State Bank of Pakistan financing of the government, reducing the external current account deficit and allowing for increased social and development spending. Following the approval of the IMF's Executive Board, an amount equivalent to US $3.1 billion has become available to Pakistan, and the remaining amount will be phased in, subject to successful implementation of the programme. This arrangement has been approved by the Board under the Fund's fast-track Emergency Financing Mechanism procedures. The reduction in budget deficit, he said, will be achieved primarily by phasing out energy subsidies, better prioritising development spending and implementing tax policy and tax administration reforms. The programme supported by the IMF envisages a significant tightening of fiscal policy with especial emphasis on reducing fiscal deficit from 7.4 per cent of GDP to 4.3 per cent. He said the IMF had approved for Pakistan a $7.6 billion rescue fund that would support the country's economic stabilisation programme. The IMF financial assistance is aimed at restoring macroeconomic balance. At present the IMF has approved 20 per cent of the financial assistance while rest of the 80 per cent payment would be made on the successful implementation of this programme. Masood said the IMF teams would visit Pakistan to review the implementation of the programme and monitor the government achievements vis-a-vis its targets. He explained that the government of Pakistan itself has set the targets to bring down the fiscal deficit and inflation rate. "There will be more difficulties in implementing the programme as the government has to take unpopular decisions to reduce the budget deficit," he said. "Of course, bringing down the fiscal deficit and raising revenues are not easy tasks. They need sustained efforts," he asserted. He said during the next two years Pakistan would need $4 billion more and Islamabad would also require the help from other donor agencies like Islamic Development Bank, Asian Development Bank and Friends of Pakistan for this purpose. "By providing large financial support to Pakistan, the IMF is sending a strong signal to the donor community about the country's improved macroeconomic prospects," he added. The above-said visit will also make all the stakeholders like the media to know about the objectives of the IMF. Responding to a question regarding the depreciation of currency, he said that rupee was already depreciated even before the government sought IMF's assistance. Since Pakistan has joined the IMF programme, the rupee started gaining strength against dollar. Actually, he said, most of the countries contact the IMF when they are caught in financial crunch and same was the case with Pakistan. To another question about injecting Rs 20 billion into the stock market, he said that we had proposed to stop this injection until the economy stabilised, adding that as the situation is improving now we have allowed the release of this market support fund for proper functioning of the stock market. To another question, he said the imposition of agri-tax and cut in defence budget is not part of the IMF agreement. "We did not go (to) the specifics like reducing defence budget. It is up to the government to reduce its spending and generate revenue, the intentions is not to micromanage," he said. When asked while the interest rate is being cut worldwide, in Pakistan it is the other way around, he said it is due to the core inflation, which is now touching the level of 18.9 per cent in the country. He said that the commercial banks were not willing to lend money to the government owing to negative interest rate after making allowances for inflation. The government had to fulfill this requirement by borrowing from the State Bank and the central bank had to accomplish this need by printing more currency notes, causing more inflation. After two per cent increase in the interest rate, the government is now able to borrow also from the commercial banks, he added. He said the government must build the tax net that would provide fiscal space. When asked that IMF approves loans at 0.5 to 1 per cent mark-up worldwide but Pakistan has been given the loans at 3.5-4 per cent mark-up, Masood clarified that all countries are provided loans at the same rate. He maintained that provision of loans on less interest rate was available under Poverty Reduction and Growth Facility (PRGF) arrangement, which has now been discontinued. He further said the interest rate depends on the amount of loans. In case of huge and long-term loans the borrower has to pay more interest as is the case with Pakistan. To another question about the IMF interaction with the Pakistani government, Masood said they met Pakistani leadership including president, prime minister and ministers concerned. "They are all committed to implement the IMF programme," he said.