ISLAMABAD, Oct 11: The government has asked the World Bank to help Pakistan establish a mechanism for a more effective monitoring of flood-related international aid flows to address the issues of accountability and transparency.

Sources told that Finance Minister Dr Abdul Hafeez Shaikh, who is in the United States to attend annual meetings of the World Bank and International Monetary Fund (IMF), has sought enhanced engagement of the World Bank in the monitoring to facilitate larger and quicker aid disbursements.

The government, said the sources, expected the World Bank expertise in providing assistance to the flood-affected people, particularly to the poor and vulnerable groups.

The sources said Mr Shaikh was also touching the base with the IMF authorities and key finance ministers enjoying voting rights and influence in the IMF for future programme financing that Pakistan might require after the second half of the current financial year and to see whether a new programme could be discussed with the IMF and what could be the fresh terms and conditions.

They said the economic situation had become critical because of problems with the IMF programme that had practically been jeopardised after slippages on the key performance criteria.

As a result, the disbursement of the remaining about $4 billion of the $11.3 billion standby arrangement had inordinately been delayed for over four months with no immediate resolution in sight.

“There is only one month left in the completion of 25-month standby arrangement, key benchmarks under the programme remain unfulfilled and the schedule for disbursement of two tranche has already been missed,” a government official said.

He said the deadline for introduction of reformed GST with effect from October 1, and complete elimination of subsidies from the power sector also could not be met.

The sources said apparently the IMF might not agree to a concessionary poverty reduction and growth facility (PRGF) and the new programme would be under difficult terms and conditions.

The economic team, they said, believed that the IMF programme was necessary to ensure fiscal discipline that had been the key challenge for almost five years now.

They said that most of the problems related to fiscal discipline emerged soon after the former Prime Minister Shaukat Aziz decided to say goodbye to the IMF a few years ago that led to a freeze on power tariff and resultant higher subsidies.

The current economic policymakers were not inclined to repeat the mistake and those who supported giving up the current IMF programme have been sidelined.

Pakistan, the sources said, would be in a position by the end of this month to know how much financing it required and from which sources these could be arranged because the consolidated figures of the fiscal and economic indicators for the first quarter (July 1 to September 30) of the current fiscal year are yet to be finalised.

They said the situation had already become precarious at the conclusion of the last fiscal year as the ratio of federal revenues as percentage of GDP fell from 9.1 per cent in 2009 to nine per cent in 2010, lowest in almost 30 years and reasonably short of 9.4 per cent budgeted target.

As pointed out by the Asian Development Bank, the fiscal position was even more precarious than reflected by the budget deficit alone.

Net revenue available to the federal government (nine per cent of GDP) was well short of current outlays (12 per cent of GDP) in fiscal year 2010.

The ADB said the combined total subsidy outlays of 1.6 per cent of GDP, defence spending of 2.6 per cent, interest costs of 4.4 per cent and pensions of 0.5 per cent amounted to 9.1 per cent of GDP.

It said the general operating expenses of the federal government at 2.9 per cent were thus left to be financed by borrowing.

Additional pressure on domestic credit markets came from escalating losses of the state-owned enterprises in recent years, which accounted to an estimated Rs245 billion or 1.7 per cent of GDP in 2010.