The IMF has announced that it will renew financial support to the government and disburse about $160 million of the delayed standby credit. The announcement came after an IMF mission visited Islamabad during the last week in October to assess the government’s stabilisation measures. The head of the mission, Antonio Furtado, told a news conference on 31 October that the standby credit could act as a bridge to a new extended structural adjustment facility (ESAF) in fiscal year 1997/98, provided that the government’s performance is satisfactory. The economic reforms, announced on 22 October, include a 7.86 per cent devaluation of the rupee, spending cuts, new taxes and a 10 per cent rise in oil prices.
Prior to the IMF’s announcement, Prime Minister Benazir Bhutto gave up the finance portfolio which she has held for three years. Privatisation Minister Naveed Qamar is to be appointed Finance & Economic Affairs Minister, whilst remaining in charge of the privatisation portfolio. Former state minister for finance, Makhdoom Shahabuddin, will be assigned a new portfolio. VA Jafarey, Bhutto’s economic adviser, is widely reported to have recently tendered his resignation. Mian Tayyeb, secretary at the ministry and a close consort of Jafarey’s, has been moved to the Industries & Production Ministry and has been replaced by Moeed Afzal, formerly additional secretary at the Finance Ministry.
Under the former situation, it was not always clear where responsibility for economic policy laid, critics argued. Bhutto’s critics have also said that the prime minister lacks the economic expertise to run the Finance Ministry. The reshuffle is designed to improve the government’s economic credibility, analysts say.