Economic Team Gets Thumbs Up

An IMF official said on Thursday that the fund would release delayed tranches of a $600 million standby loan as soon as humanly possible after a visiting IMF mission endorsed the governments stabilis- ation package announced on October 22.

Prime Minister Benazir Bhutto on Monday gave up the finance portfolio she had held for three years and named Qamar, the privatisation minister, as minister for finance and economic affairs. He retains his old portfolio.

Qamar said on Thursday that State Minister for Finance Makhdoom Shahabuddin would be given a new portfolio soon. The ministry had actually been run by Bhuttos adviser for finance and economic affairs, V.A. Jafarey, who has gone on leave.

 

Analysts said Hussain Lawai, chairman of the private Muslim Commercial Bank, who was named consultant to the Finance Ministry on Monday, could now wield the influence Jafarey once had.

Anisur Rehman, head of research at Crosby Securities, said foreign investors held Qamar in high regard as chief of the privatisation commission. A number of our foreign clients are happy to see Qamar in a more responsible place, he said.

He said foreign investors now expected a more aggressive privatisation policy and better economic management. We think the IMF should also be happy with the changes, he said.

The IMF is known to have shown scepticism at some of the economic data provided by Bhuttos former team.

It had also made clear that its patience with Pakistans repeated failures to meet agreed targets was running thin, saying it would only send a team to Islamabad to help with banking sector reforms after a comprehensive and credible stabilisation package was in place.

The World Banks resident mission said in a statement on Thursday that the bank would send a team soon to help with the banking reforms after the accord.

The IMF had delayed disbursements of the standby loan provided in December 1995 and said it must complete a review of the standby agreement before payments could be resumed.

Muddassar Malik, senior analyst and director of BMA Capital Management, said the market was looking to the new team to maintain good relations with the IMF by bolstering financial discipline.

Politically, this is a sign of realisation if not maturity, that a strong Finance Ministry was badly needed, Malik said.

Pakistan needs the IMFs seal of approval for its economic policies to stave off a threatened downgrade of its credit ratings and maintain access to international capital markets.

Critics had argued that Bhutto lacked the expertise to run the Finance Ministry herself and should appoint a new economic team to try to restore Pakistans battered international image.