Govt shuffles economic team

ISLAMABAD - The leadership of ruling PPP has pulled up its socks to fulfil its commitments with the International Monetary Fund as it reshuffled its economic team to gear up imposition of Reformed General Sales Tax (RGST). President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani met here on Monday evening and decided to take Dr Waqar Masood Khan as Secretary Finance in place of Salman Siddiq. Salman Siddiq who was preferred by former finance minister Shaukat Tarin over Dr Khan has been made Chairman Federal Board of Revenue that is a demotion in technical terms, as Revenue Division is part of the Finance Ministry. Suhail Ahmed who was looking after the FBR as Chairman has been transferred as Secretary Planning and Development Division. At the same time the PPP leadership has also given go-ahead to Finance Minister Abdul Hafeez Shaikh to apply for an extension in the standby loan programme of the International Monetary Fund. Seeking an extension beyond December 31 expiry of the of programme means reaffirming the Government of Pakistans commitment to impose RGST in addition to meeting rest of the conditionality. According to sources close to the Finance Minister, the IMF programme has to be extended in technical terms as long as the Government of Pakistan does not decline fulfilment of its commitments under it. The sources were of the view that the programme was most likely to be extended for three to six months. The sources told TheNation that the Finance Minister himself was not clear whether or not the IMF would release any more funds before the passage of the General Sales Tax Bill 2010 from the National Assembly. The President and the Prime Minister also discussed the prevalent political situation in the country in the wake of JUI-Fs withdrawal from the ruling coalition and the MQM concerns over Sindh Home Minister Zulfiqar Mirzas irritating statements. The two leaders also exchanged notes over the conclusion of Chinese Premier Wen Jiabaos visit that has been termed as highly fruitful for Pakistan especially at the current critical juncture of time keeping in view regional and international geopolitical scenarios. The Prime Minister also briefed the President on Pakistans issues in the Economic Cooperation Organisation (ECO) for which the latter was heading to Turkey on Tuesday. The top leadership also measured the pressure being build up by the Americans for an earliest army operation in North Waziristan Agency. Reuters adds: Pakistan has formally asked for a nine-month extension of its $11 billion International Monetary Fund bailout package, a source involved with the IMF talks said on Monday. The seven-tranche IMF programme, which has kept Pakistans economy afloat since it was agreed to in November 2008, was scheduled to end this year but the release of the last two tranches has been delayed because Pakistan has yet to implement key fiscal reforms. Earlier in December a Finance Ministry official had said Pakistan planned to seek an extension of the loan programme to win more time to implement the reforms needed to secure the next tranche. Pakistan has asked for an extension and the IMF board is considering the request, said the source, who is based in Pakistan. Failure to complete the IMF programme could discourage other international donors from future lending. Pakistan needs all the financial support it can get to recover from summer floods that inflicted nearly $10 billion in damages, and to sustain a costly war against militancy that has weighed heavily on its efforts to attract much-needed foreign investment. Pakistan sought the extension after missing several deadlines on implementing a reformed general sales tax (RGST), which was originally scheduled for July and is a key conditions to get the sixth tranche the country hoped to get in December. The government introduced a bill in the National Assembly in November on the RGST and analysts expect it to pass, but not before January 2011 because the Pakistan Peoples Party-led government is facing fierce opposition from almost all political parties, including the main opposition, Pakistan Muslim League-Nawaz (PML-N) of former prime minister Nawaz Sharif. He says the RGST will fuel inflation. The IMF and other donors want Pakistan to broaden its tax to GDP ratio, which is currently at about 10 percent, one of the lowest in the world. In May, Pakistan received $1.13 billion in the fifth tranche of the programme.