ISLAMABAD - Political leadership of Pakistan Peoples Party (PPP) led coalition govt is reluctant to approach International Monetary Fund (IMF) for fresh programme owing to more stringent conditionalities that might deprive them from public support in the upcoming election, it has learnt on Monday.

Official sources have informed The Nation that political leadership of coalition government does not want to enter in new programme with IMF, as if it approves, would be with even more stringent conditions than the last’s programme expired in September last year. Sources further said that IMF’s previous conditionalities like introduction of Reformed General Sales Tax (RGST) and power sector reforms included elimination of subsidy on electricity could affect their vote bank in the election to be held in the upcoming fiscal year 2012-13.

A total amount of $1.2 billion would be paid by Pakistan to IMF during the current fiscal year 2011-13, which includes $990 million of the Standby Agreement (SBA) loan and $210 million from previous IMF loans. Pakistan in February has paid first instalment worth $399 million of loan it received from the IMF under Standby Arrangement signed in 2008.

Sources said that economic team of govt is willing to take fresh medium-term programme of about $3.5-5b for the repayment of loan to IMF.  It might be recalled here that Pakistan has not been able to meet performance criteria agreed with IMF under $11.3b Stand-by Arrangement (SBA) including fiscal and power sector reforms, introduction of RGST in integrated mode. Due to this SBA could not move ahead to its actual conclusion and Pakistan did not get last two tranches worth of $3.4b of SBA. According to repayment schedule agreed between Pakistan and IMF, Pakistan will repay $7.6b loan to the IMF till the end of fiscal year 2014-15.

Independent economists are of the view that with the repayment of instalment, IMF starts increasing pressure on country’s economy without taking new programme.