ISLAMABAD, June 5: Pak Istan Is pursuing economic reforms agreed by the International Monetary Fund (IMF), but will need a magic wand" to meet its budget deficit tar gel In fiscal >995/96. Commerce Minister Chaudry Ahmed Mukhtar says, reports Reuter.

The IMF has given Prime Minister Benazir Bhutto s government another 12 months to slash the deficit to four per cent of Gross Domestic Product (GDP) after it failed to reach that goal this year.

Official estimates put this year's deficit at 5.6 per cent of GDP. compared to 5.8 per cent in 1993/94

Asked about prospects for reaching four per cent in 1995/96 (July-June). Mukhtar said: Our aim is that, but how to achieve it ... unless we have some magic wand in our hand?" ,

Mukhtar told Reuters in an interview on Wednesday the government was pondering’ why the IMF programme had failed to bring inflation or the deficit under control.

We did whatever they (the IMF) said on the dotted line." he said. "But our Inflation has gone up. our deficit is still there."

The IMF prescribed cutting import duties and tariffs on one hand and reducing the deficit by curbing borrowing and generating more tax revenue on the other.

"If both sides are to be catered for. they the net result is Inflation or stagflation." Mukhtar said.

A western economist, who asked not to be named, said the IMF had warned the government last year its revenue target was too ambitious and had wanted corrective action, such as raising fuel prices, if

and when performance began to slip.

"We are in a very tricky situation. Mukhtar said. "If you Increase (prices on) inputs like, electricity, gas. petroleum. they have a roller ball effect on everything."

The economist said the government had curbed spending but had failed to implement sales tax properly and would have to enact politically painful decisions to cut the deficit. ,

Asked if the government might discard the IMF pro-

gramme. Mukhtar said: "no. not at the present moment, but we are very carefully studying where have we faltered, and if we have not faltered, then a better solution has to come out from the IMF."

Mukhtar said Pakistan had increased tax revenue by about 50 billion rupees (1.6 billion dollars) In the past two years.

"The net result is that there is presently inflation of 15 per cent. If we have to increase our revenue by another 50' billion in this coming year, the inflation rate would go through the roof.” be said;