ISLAMABAD, Jan 16: Expressing concern over negligible progress on reform agenda over the last five years, the International Monetary Fund (IMF) has linked Pakistan’s macroeconomic stability with complete turnaround of public sector entities, particularly in the power sector, and enhanced domestic resource mobilisation.

With this assessment of Pakistan’s economic situation, a visiting mission of the IMF led by Jeffrey Franks and the country’s economic team led by Finance Minister Dr Abdul Hafeez Shaikh would enter into policy level discussions on Thursday to become the basis of future relationship between the two sides and perhaps a new bailout package of over $4 billion. A senior government official told Dawn on Wednesday that the finance minister who has been staying in Karachi since last weekend returned to the federal capital. He was briefed by the members of his team over technical level discussions concluded with the IMF on Tuesday.

The official said the IMF delegation had found serious faults with Pakistan’s reforms programme specifically relating to restructuring of power sector, public sector enterprises and revenue situation and as a result projected Islamabad’s fiscal deficit at around 7 per cent of GDP during the current fiscal year against authorities budgeted estimate of 4.7 per cent of GDP.

An official who did not want to be named said the overall situation had somehow become uncertain as negatively reacted to by the stock market investors but said it was “a spontaneous panic nervousness” that was expected to become normal in a couple of days.

He, however, agreed that a sort of uncertainty would remain in place for sometime until political transition was over. “Our performance on economic side was not something to cheer about but every development taking place on a daily basis is contributing to the difficulties”, he added.

With exchange of data on almost all aspects of the national economy now complete, the IMF staff mission is reported to have finalised its assessment of the economic situation on ground in a report that would become basis of the policy level discussions.

The preliminary assessment has been shared with the ministry of finance, an official said.

Finance Secretary Abdul Wajid Rana told Dawn that the technical level talks had been completed and the two sides would start policy level discussions on Thursday.

Responding to a question, he said the government side had not yet discussed with the mission the possibility of new programme or future course of relationship saying such issues were discussed at the policy level talks. He said the government had not yet taken a decision about a new programme.

The two sides, he said, have covered revenue side, expenditures, energy situation, banking sector supervision, monetary policy and restructuring of the Public Sector Enterprises (PSEs). “We have provided them with all the required data” that became the basis of IMF interim assessment.

Mr Rana said there were no issues on the banking sector supervision. The IMF team was focussing on energy sector’s enforcement mechanism to control theft and pilferage, he said adding the fund authorities were asking about energy sector reform programme for the next three years, including conversion of furnace oil based power plants to coal, hydropower generation to improve fuel mix.

In the short term, the mission wants web-based monitoring of power generation, transmission and distribution for making the entire power sector mechanism transparent, the finance secretary said.

He said the FBR had presented a baseline scenario to the IMF team under which the overall FBR tax revenue would reach about Rs2,250 billion through administrative measures. The FBR’s target for tax collection was budgeted at Rs2,381 billion.