IMF asks Pak to maintain development spending.

The International Monetary Fund (IMF) has expressed the desire that Pakistan should "protect" its development spending at this year's level in the next budget, which will limit the government's options to achieve primary fiscal balance.

Head of IMF Mission to Pakistan Ernesto Rigo expressed these views during a meeting with Planning, Development and Reform Secretary Zafar Hasan, according to the planning ministry officials.

Rigo is leading a staff-level mission to Pakistan to finalise the Extended Fund Facility to help Pakistan steer out of the economic crisis.

It is the second staff-level visit of the IMF to conclude the deal for a three-year bailout package totalling around $6.5 billion. The fund is in the town for the last five days and there is still no convergence on the macroeconomic framework, according to sources. The projections made by the finance ministry and the IMF team on every main economic indicator varied, they added.

During the meeting, the planning secretary pointed to the problems the federal government was facing due to the squeezing fiscal space for development spending, said the officials. There are concerns that the development spending, which has already been on the wane over the past two years, may further decrease due to the IMF programme.

Rigo was said to have told the planning secretary that the IMF was not in favour of reducing the development spending. Rather, he said...